1. Examine the statements of cash flows for both companies. What are the primary sources of cash flows for both companies for fiscal year 2015
2. Two financial ratios (the debt-to-equity ratio and the times interest earned ratio) are discussed in this chapter. Compute these ratios for both companies for fiscal year 2015. Are they relevant for these companies? Explain.

FINANCIAL REPORTING AND ANALYSIS CASES CP10-4 Analyzing the Use of Debt LO10-1 Cricket Corporation's financial statements for 2017 showed the following: Statement of Earnings Revenues $300,000 Expenses (198,000) Interest expense (2,000) Pretax earnings 100,000 Income tax (30%) (30,000) Net earnings $ 70,000 Statement of Financial Position Assets $300,000 Liabilities (average interest rate, 10%) 20,000 Share capital 200,000 Retained earnings 80,000 $300,000 Notice that the company had a debt of only $20,000 compared with share capital of $200,000. A consultant recommended the following: debt, $100,000 (at 10 percent) instead of $20,000, and share capital of $120,000 (12,000 shares) instead of $200,000 (20,000 shares). That is, the company should finance the business with more debt and less owner contribution.Required (round to the nearest percent): 1. You have been asked to develop a comparison between (a) the actual results and (b) the results based on the consultant's recommendation. To do this, you decided to develop the following schedule: Results with an $80,000 Actual Results Increase in Debt and an Item for 2017 $80,000 Decrease in Equity a. Total debt b. Total assets c. Total shareholders' equity d. Interest expense e. Net earnings f. Return on total assets g. Earnings available to shareholders: (1) Amount (2) Per share (3) Return on shareholders' equity 2. Based on the completed schedule in (1), provide a comparative analysis and interpretation of the actual results and the consultant's recommendation