NORTHEAST ART SUPPLY, INC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,2017 CASH FLOW FROM OPERATING ACTIVITIES: $30,175 Net Income Adjustments to reconcile net income to net cash flows Depreciation Decrease in accounts receivable Increase in inventory Increase in accounts payable Increase in income taxes payable 8,500 1,000 (5,000) 6,000 3.000 13.500 $43,675 Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Equipment Purchase of Investments Sale of Investments $ (2,000) (10,000) 20,000 Net cash provided by investing activities 8,000 CASH FLOW FROM FINANCING ACTIVITIES Payments on debt Payment of dividends $(23,000) (5,000) Net cash provided by financing activities (28.000) NET INCREASE IN CASH Cash at beginning of the year CASH AT END OF YEAR $23,675 $35.325 $59,000 NORTHEAST ART SUPPLY, INC BALANCE SHEET DECEMBER 31, 2017 CURRENT ASSETS Cash Marketable securities Accounts Receivable Less Allowance for Doubtful Accounts$ 2.000 Notes Receivable Merchandise Inventory Prepaid Expenses $59,000 $10,000 $40,000 $38,000 $32,000 $41,000 $ 2.000 $182.000 Total Current Assets FIXED ASSETS Delivery Equipment Less Accumulated Depreciation Furniture and Fixtures 110,000 $90,000 62,000 $47.000 Total Fixed Assets INTANGIBLE ASSETS $137,000 Patents 21,000 Total Intangible Assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts Payable Notes Payable Salaries Payable Taxes Payable $35,000 $25,675 4,000 $5,325 Total Current Liabilities LONG-TERM LIABILITIES $70,000 Mortgage payable on store equipment $40,000 Total Long-Term Liabilities TOTAL LIABILITIES STOCKHOLDER'S EQUITY $40,000 $110,000 Common Stock (25,000 times $6) Retained Earnings $150,000 TOTAL OWNERS EQUITY TOTAL LIABILITIES AND OWNERS EQUITY $230,000 NORTHEAST ART SUPPLY, INC INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 REVENUES Gross Sales Less Sales Returns and Allowances Less Sales Discounts $465,000 $9,500 Net Sales -4500 4,000 $451,000 COST OF GOODS SOLD Beginning Inventory, January 1, 2017 Purchases Less Purchase Discounts $40,000 $346,000 Net Purchases Cost of Goods Available For Sale Less Ending Inventory, December 31, 2017 $375,000 Cost of Goods Sold GROSS PROFIT $117,000 OPERATING EXPENSES Selling Expenses 22,000 Sales Salaries Advertising Sales promotion Depreciation-store equipment Depreciation-delivery equipment Miscellaneous selling expenses 4,000 2,500 3,000 4,000 37,000 Total Selling Expenses General Expenses Office Salaries Rent Depreciation-furniture Utilities expense Insurance expense Miscellaneous expense $28,500 8,500 1,500 2,500 1,000 Total General Expenses Total Operating Expenses Net income from Operations Less Interest Expense $37,500 NET INCOME BEFORE TAXES Less Federal Income Taxes $35,500 5.325 NET INCOME AFTER TAXES $30,175 4. What information can be learned about the performance of Northeast Art Supply, Inc. m the calculation of the following sets of ratios? In answering this question please refer to the ratios that you calculated for Northeast Art Supply, Inc. in Part I above. a. Liquidity Ratios b. Leverage Ratios c. Operating Ratios d. Profitability Ratios
