Explain what the statement of cash flow indicates about the financial health of the company. Consider the following in your response:

Cash flow versus profit

Ability to meet obligations

Efficiency of operations

Investment and growth potential Shaggy's Surfboards Shaggy's Surfboards Shaggy's Surfboards Shaggy's Surfboards

Balance Sheet $(000\text{'}$s$)$ Year $1$ Year $2$ Income Statement $(000\text{'}$s$)$ Statement of Cash Flows $-$ Direct Statement of Cash Flows $-$ Indirect

For Year Ending Year $2$ For Year Ending Year $2$ For Year Ending Year $2$

Assets

Cash flow from operating activities: Cash flow from operating activities:

Cash $50,00055,000$ Sales $20,000$ Cash Receipts: Net Income $4,310$

Accounts Receivable $($Net$)4,0005,500$ Cost of Sales $9,690-$Received From Customers $20,215$ Adjustments:

Inventory $7,5006,800$ Wage Expense $5,500$ Cash Payments: Change in A$/$R $1,500$

Property, Plant, and Equipment $5,0005,000$ Depreciation Expense $250-$Vendors $8,190$ Change in Inventory $(700)$

Accumulated Depreciation $(1,500)(1,750)$ Interest Expense $200-$Employees $5,075$ Noncash Event Adjustment $250$

Total Assets $65,00070,550$ Tax Expense $50-$Interest $200$ Change in A$/$P $1,500$

Net Income $4,310-$Taxes $50$ Change in Wages Payable $(75)$

Accounts Payable $8,50010,000$ Net Cash Provided by Operating Activities $6,700$ Change in Interest Payable $(10)$

Wages Payable $500425$ Change in Taxes Payable $(75)$

Interest Payable $210200$ Cash Flow From Financing Activities Net Cash From Operating Activities $6,700$

Taxes Payable $12550-$Notes Payable $100$

Notes Payable $300200$ Cash Flow From Financing Activities

Common Stock $25,00025,000$ Total Cash Flow $6,800-$Notes Payable $100$

Retained Earnings $30,36534,675$

Total Liabilities and Equity $65,00070,550$ Total Cash Flow $6,800$