Community Minded" is a non-profit organization with a mission to help individuals gain employable skills. The organization operates a community grocery store that offers among other items, local produce for sale to the community. During the last year, 10 individuals gained valuable work experience with 4 of the individuals obtaining employment outside of the organization. Community Minded has completed one year of operation with the following balance sheet items:

Cash: $5,000

Receivables: $5,000

Inventory: $20,000

Long-term assets: $20,000

Equity/Retained earnings: $20,000

Short term bank loan: $5,000

Trade creditors: $10,000

Long-term bank loan: $10,000

Accrued expenses: $5,000

The net income for the year was $8,000, after sales of $225,000, payment of $2,000 in interest and $4,000 in depreciation.

Community Minded has received more applications than expected from individuals looking to work and gain skills in their store. The organization is now looking to expand and establish a 2^nd store that will be known as Community Minded #2.To set up the 2^nd store in leased/rented premises like the first one, it will cost $50,000.Donations and contributions of $30,000 have been received for the 2^nd store and a bank loan of $25,000 has been approved that will provide the organization with $5,000 cash that can be used as working capital. The bank loan would need to be repaid over 2 years. The 2^nd store will have the following balance sheet items:

Cash: $5,000

Inventory: $15,000

Long-term assets: $35,000

Long-term bank loan: $25,000

Equity: $30,000

Community Minded #2 is forecasting sales of $250,000, expenses of $220,000, depreciation of $5,000, and bank interest of $4,000.

1)Show a balance sheet for Community Minded #1 that has finished the year. Calculate the current ratio, receivable collection period, inventory turnover ratio, and day's sales in inventory. Comment on the financial and nonfinancial successes or failures of the organization. Offer suggestions that could improve their situation.

2)Explain how depreciation impacts the cash flow of the organization. What is the difference between cash flow and net income?

3) Explain the difference between short and long-term assets.

4) Show a projected/forecasted balance sheet and income statement with the information provided for Community Minded #2. Comment on the financial structure of the 2^nd store and do you feel the financial structure of the 2^nd store is sound enough to be successful. Comment on what needs to be in place for the organization to be financially and organizationally successful.