FINANCIAL REPORTING AND ANALYSIS CASES Bite Rock Brenery Inc. Big Rock Brewery inc, is a leading Canadian craft brewer that produces premium, all-natural craft beers. Its statements of cash Fage305 flows for fiscal years 2018, 2017, and 2016 are shown below: OTFNTING AETTVITIES Net income (loss) for the year $360$(1.020)$(453) Items not affecting cash: Depreciation and amortization Loss (gain) on sale of assets Sharebased payments: Lease incentive Amortized debt issue costs 3.2012,942259 Deierred income tax expense (recovery) (29) 20 (65) Change in non-cash working capital related to operations Accounts receivable (220) Inventary (418)=158 (209) Prepaid expenses (119) 41145 Accounts poyable and accrued liabilities 1.209 (464) Income taves payable 197 (160) (51) Starebased payment liabilities (19) Sharebaved psyment liabilities. Cash prewided by operating activitics FINANCING ACTTVTHIES Repayment of tinance lease Proceeds from longterm debt Increase (decrease) in bank indebtedness Repayment of longterm debt (330) Proceeds from isswance of shares Cash prosided by (wsed in) financing activities (654) \begin{tabular}{rr} (323) & \\ \hline 1,000 & 1,5962,467 \\ \hline(2,759) & (352)1355) \end{tabular} INVZSIING ACTIVIIIES Purchase of property. plant, and equipment (2,013) Purchase of intangibles (348) (391) (36) Procteds from sale of property. plant, and equipment Cash pronided by (used in) imvesting activities Reguind: 1. The cash flows from operating activities show that depreciation and amortization are added to net income (loss) for the ycar, Is depreciation and amortization a source of cash? Explain. 2. Wis the cash collected from customers during fiscal year 2018 higher or lower than Big Rock's sales revenue for that year?' Exphin. 3. Did Big Rock expand during 2017 and 2018? If so, how did the company pay for its expansion? Explain. 4. Compute and analyze Blg Rock's quality of earnings ratio, capital expenditures ritio, and free cash flow for 2017 and 2018 . 5. Analyze the company's pattern of cash flows from operating, investing. and financing activities crer the three years. What conclusion cart you draw from the changing pattern of cash flows? Explain. 6. Obtain a copy of Big Rock's statement of eash flows for the year 2019 through the company's wobsite (vin bierockbect.com) Pige yite or the SEDAR service (www sedarcema). Did the company's cash flow situation in 2019 improwe or deteriorate telative to Required: 1. The cash flows from operating activities show that depreciation and amortization are added to net income (loss) for the year. Is depreciation and amortization a source of cash? Explain. 2. Was the cash collected from customers during fiscal year 2018 higher or lower than Big Rock's sales revenue for that year? Explain. 3. Did Big Rock expand during 2017 and 2018? If so, how did the company pay for its expansion? Explain. 4. Compute and analyze Big Rock's quality of earnings ratio, capital expenditures ratio, and free cash flow for 2017 and 2018. 5. Analyze the company's pattern of cash flows from operating, investing. and financing activities over the three years. What conclusion can you draw from the changing pattern of cash flows? Explain. 6. Obtain a copy of Big Rock's statement of cash flows for the year 2019 through the company's website (www.bigrockbeer.com) or the SEDAR service (www.sedar.com). Did the company's cash flow situation in 2019 improve or deteriorate relative to previous years? Explain. 7. As a potential investor in Big Rock's shares, what additional information would you need before making your decision as to whether or not to invest in this company's shares