Power Green
Income Statements
	2018	2019	2020	2021	2022
Sales	$ 699,005,000	$ 891,945,500	$ 506,443,300	$ 487,421,800	$ 783,601,000
Cost of Goods Sold	426,250,000	550,357,100	323,504,700	306,867,800	499,025,500
Gross Profit	272,755,000	341,588,400	182,938,600	180,554,000	284,575,500
Operating Costs
Selling and Distribution	73,233,100	91,395,900	80,423,200	60,294,100	89,722,300
Research & Development	67,663,700	87,589,000	87,564,000	51,228,000	74,363,700
Administration	23,936,100	34,108,900	39,502,600	22,908,800	34,478,400
Depreciation & Amortization	48,556,200	60,758,400	62,517,400	61,530,300	64,200,800
Operating Profit	59,365,900	67,736,200	-87,068,600	-15,407,200	21,810,300
Interest	9,693,500	10,131,200	9,541,500	13,421,200	14,919,500
Earnings Before Taxes	49,672,400	57,605,000	-96,610,100	-28,828,400	6,890,800
Taxes	14,901,720	17,281,500	-28,983,030	-8,648,520	2,067,240
Net Income	$ 34,770,680	$ 40,323,500	($ 67,627,070)	($ 20,179,880)	$ 4,823,560

Balance Sheets
	2018	2019	2020	2021	2022
Cash	$ 25,340,000	$ 26,800,300	$ 5,630,000	$ 15,320,100	$ 23,430,300
Accounts receivable	32,364,900	41,298,300	23,449,000	22,568,300	36,281,800
Parts Inventory	95,760,300	122,134,000	326,163,600	174,872,600	128,516,200
WIP Inventory	43,427,500	54,281,800	76,223,000	51,516,400	57,422,100
Finished Goods Inventory	79,411,000	93,485,300	163,968,100	130,163,000	117,578,600
Total Current Assets	$ 276,303,700	$ 337,999,700	$ 595,433,700	$ 394,440,400	$ 363,229,000
Land, plant, and equipment, net	445,230,840	595,750,840	600,601,740	592,134,240	616,526,140
Intangibles	50,340,030	79,343,030	94,035,830	91,535,430	96,816,530
Total Non-Current Assets	$ 495,570,870	$ 675,093,870	$ 694,637,570	$ 683,669,670	$ 713,342,670
Total Assets	$ 771,874,570	$ 1,013,093,570	$ 1,290,071,270	$ 1,078,110,070	$ 1,076,571,670
Accounts payable	$ 68,700,400	$ 95,620,000	$ 167,500,300	$ 85,259,400	$ 98,361,100
Line of credit	460,000	$ 506,000	$ 557,000	$ 613,000	$ 674,000
Current portion of long-term debt	25,743,300	25,743,300	44,875,600	72,765,100	57,641,700
Total current liabilities	$ 94,903,700	$ 121,869,300	$ 212,932,900	$ 158,637,500	$ 156,676,800
Long-term debt	234,030,000	407,959,900	661,501,070	524,015,150	519,613,890
Total Liabilities	328,933,700	529,829,200	874,433,970	682,652,650	676,290,690
Shareholders' equity	442,940,870	483,264,370	415,637,300	395,457,420	400,280,980
Total Liabilities and Equity	$ 771,874,570	$ 1,013,093,570	$ 1,290,071,270	$ 1,078,110,070	$ 1,076,571,670

Operations

In order to expand sales, PGI has kept its prices constant over the last five years for water turbines. Wind turbine prices were decreased in 2020 only in order to incentivize customer business during covid; this was reversed in 2021. Only solar turbines had annual price increases. By comparison, competitors have increased prices annually.

PGI also offers its distributors terms of 2/10, net 30, which vary from the industry standard of net 30. Most distributors took advantage of these terms over the past five years.

PGI designs and assembles its products in Canada but sources its components globally. As a precautionary measure, to guard against supply interruptions caused by strikes, material shortages, and transportation delays, it stockpiles many of its key parts. Its accounts payable relate primarily to inventory purchases. Industry standard credit terms are 3/15, net 60 and most suppliers charge interest of 10 percent per annum on any overdue accounts.

In order to remain competitive with low-wage countries, PGI invested heavily in factory automation, but has had difficulties with many of the complex systems. Breakdowns and software "bugs" are common place as most of the equipment was bought from a low-cost supplier, which has since gone bankrupt. Low educational standards also made training difficult and lowered production efficiency. It was thought automation would allow the company to reduce finished goods inventory though just-in-time production, but the frequent breakdowns made it necessary to carry more stock.

To accommodate company growth, PGI built a new corporate headquarters, R&D facility and distribution centre in 2019. A number of existing buildings were considered, but a new facility in an expensive area of Toronto was constructed to increase the profile of the company.

PGI has not paid any dividends to date. Debt had already increased significantly due to growth and the new facilities, and was then compounded due to the collapse of revenues. Since 2020, management had to bear down and managed to improve the levels of debt. Terms loans and mortgages were negotiated with five different banks to diversify its funding sources. PGI is listed on the Toronto and New York Stock Exchanges and is considering going to the market to raise more equity through a secondary offering. To avoid losing control, the three founding shareholders have agreed to issue only non-voting common shares, but is appears the market has lost its appetite for this type of security. PGI maintains a $1,500,000 line of credit with Western Canadian Bank to finance seasonal variations in net working capital. The loan must be 200 percent secured by inventory and accounts receivable. Also, to comply with the different loan agreements, the following ratios must be maintained:

• The current ratio must be kept above 2.5;
• the long-term debt to total capitalization, measured as long-term debt / (long-term debt + equity), must remain below 50 percent; and
• the cash flow coverage ratio, measured as EBITDA / (Interest + Current Portion of LT Debt) above 2.0.

Company Formation

PGI was formed in 2008 by Dr. Maggie McGruder, P.Eng. who had taken a buyout from Natural Resources Canada, a department of the federal government of Canada, after becoming frustrated with the slow rate of implementation of her many ideas. McGruder completed her PhD in electrical engineering in 1997 at the University of Manitoba where her dissertation dealt with home and farm-based energy alternatives such as wind turbines, water turbines, solar panels, geothermal, and biogas. In the new start-up, she decided to focus on wind and water turbines and solar panels because of her background in electrical engineering. Also, in her opinion, the geothermal and bio gas segments of the alternative energy industry were not cost effective in the long term.

McGruder's knowledge of manufacturing and marketing was limited so she recruited two partners, Matthew Wiggins, P.Eng. and Nancy Cranston, CSP. Wiggins had over 30 years of experience supervising manufacturing facilities for companies such as Caterpillar, General Electric, and Nortel while Cranston had been a vice-president of marketing and sales for a number of equipment producers with her most recent position being with Stanley Tools. Each contributed $200,000 for a 25 percent share of the company and the remainder of the seed capital was provided by Wilson McIvor, a retired Fortune 500 CEO, who had been an "angel" to a number of other tech start-ups in Canada. After three rounds of funding from CanDo Venture Capital, each of the three founders' holdings had been reduced to 15 percent. In 2014, the angel and venture capitalists took PGI public in an initial public offering in order to exit the investment. The partners bought enough of the shares to maintain control.

Company Expansion

The period from 2008 to 2010 was a troublesome one for PGI. Products took much longer than planned to develop and production processes where difficult to master. Venture capital financing was also difficult to acquire and the owners had to relinquish a much larger portion of the business than hoped to secure the needed funding. By 2011, the products and manufacturing facilities were in place. Despite initial hesitancy, a number of key distributors were recruited. In Canada, both Canadian Tire and Home Hardware agreed to carry PGI's products. Canadian Tire also featured them in one of their advertising campaigns where they stressed their new focus on environmentally-friendly products. The Co-op, a farmer cooperative organization and major agricultural supply chain, agreed to sell the products and allowed PGI to promote them at all their membership meetings. In the U.S., Eagle Hardware and a number of regional farmer cooperatives also signed distribution agreements.

Sales of PGI's products increased dramatically from 2012 to 2019. Farmers welcomed them as a way to reduce costs in a competitive industry and to avoid frequent power outages that can be problematic, especially for dairy and poultry producers. People living in remote areas found them to be a cheaper alternative to burning fossil fuels, while environmentally conscious consumers felt they greatly reduced their ecological footprint.

I need a cash flow statement for all 4 years, that is, from 2019 to 2022 (year-wise) and the cash flow statement analysis in very simple terms (decision)

I got this answer from a tutor, but I need to understand how you got the calculation (what all the items you added in order to get the answer)?I have highlighted the doubts in BOLD.Please refer those items and let me know how the tutor got -(Other Current Assets/Liabilities,Cash Flow from Operating Activities,Capital Expenditures, investments,Cash Flow from Investing Activities, Issuance/(Repayment) of Debt and Net Cash Flow)

Part 1: Answer:

Cash Flow Statement for Power Green Inc. (2019-2022):

| | 2019 | 2020 | 2021 | 2022 | |------------------|---------------|---------------|---------------|---------------| | Operating Activities | | | | | | Net Income | $40,323,500 | ($67,627,070) | ($20,179,880) | $4,823,560 | | Depreciation & Amortization | $60,758,400 | $62,517,400 | $61,530,300 | $64,200,800 | | Changes in Working Capital | | | | | | Accounts Receivable | $8,933,400 | $17,849,300 | $-880,700 | $13,713,500 | | Inventory | $26,835,200 | $-132,291,000| $61,606,600 | $-13,660,700 | | Accounts Payable | $26,919,600 | $71,880,300 | $-82,240,900 | $13,101,700 | | Other Current Assets/Liabilities | ($10,299,000) | $16,116,700 | $5,267,500 | $12,920,200 | | Cash Flow from Operating Activities | $153,471,100 | ($91,554,000) | $25,103,920 | $110,721,060 | | Investing Activities | | | | | | Capital Expenditures | ($180,520,000)| ($36,263,500) | ($6,600,000) | ($43,391,800) | | Other Investments | $20,100,000 | $0 | $0 | $0 | | Cash Flow from Investing Activities | ($160,420,000)| ($36,263,500) | ($6,600,000) | ($43,391,800) | | Financing Activities | | | | | | Issuance/(Repayment) of Debt | $173,629,900 | $253,541,170 | ($137,729,550)| ($4,401,260) | | Issuance/(Repurchase) of Equity | $0 | $0 | $0 | $0 | | Dividends Paid | $0 | $0 | $0 | $0 | | Cash Flow from Financing Activities | $173,629,900 | $253,541,170 | ($137,729,550)| ($4,401,260) | | Net Cash Flow | $166,681,000 | $125,723,670 | ($119,225,630)| $63,927,000 | | Beginning Cash Balance | $26,800,300 | $5,630,000 | $15,320,100 | $23,430,300 | | Ending Cash Balance | $26,800,300 | $5,630,000 | $15,320,100 | $87,357,000 |

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