KLM, Inc.'s Comparative Balance Sheets for December 31, 2016 and 2015, are presented below. Additional information about KLM'a operations during 2016 is as follows: (1) Net Income $56,000; (2) building and equipment depreciation expense amount, $30,000; and $6,000 respectively; (3) equipment that cost $27,000 with accumulated depreciation of $25,000 sold at a gain of $10,600; (4) purchased an equipment for $25,000; (5) patent amortization, $6,000; (6) purchase of patent, $2,000; (7) funds borrowed by signing notes payable, $50,000; (8) paid-down notes payable, $30,000; (9) land and building purchased for $324,000 by signing a mortgage for the total cost; (10) 3,000 shares of $20 par value common stock issued for total of $100,000; and (11) paid cash dividend, $18,000. Net Sales for the year, $ 1,120,000. KLM, Inc. Comparative Balance Sheets December 31, 2016 and 2015 2016 2015 Assets Cash $ 189,120 S 54,720 Accounts Receivable (Net) 204,860 150,860 Inventory 225,780 275,780 Prepaid Expenses 0 40,000 Equipment 66,000 68,000 Accumulated Depreciation- Equipment -29,000 -48,000 Land 50,000 0 Building 274,000 0 Accumulated Depreciation- Building -30,000 Patents 8,000 0 12,000 Total Assets 958,760 $ 553,360 Liabilities and Stockholders' Equity Accounts Payable 21,500 73,500 Accrued Liabilities 0 24,600 Notes Payable 20,000 0 Mortgage Payable 324,000 0 Common Stock, $10 par value 360,000 300,000 Additional Paid-In Capital 114,400 74,400 Retained Earnings 118,860 80,860 Total Liabilities and Stockholders' Equity 958,760 $ 553,360 Required: a- Using indirect method, prepare a Statement of Cash Flows for KLM, Inc. b- Why did KLM have an increase in cash of $134,400 when it recorded Net Income of only $56,000. Discuss and interpret. c- Compute and assess Cash Flow Yield; Cash Flows to Sales, Cash Flows to Assets and Free Cash Flow for 2016. What is your assessment KLM's cash generating ability?