Prepare a statement of cash flows for Abraham's Manufacturing Company for the year ended December 31, 2012. Interpret your results.

2011 Cash $89,000

Accounts Receivable $64,000

Inventory $112,000

Prepaid Expenses $10,000

Total Current Assets $275,000

Gross Plant and Equipment $238,000

Accumulated Depreciation ($40,000)

Total Assets $473,000

Accounts Payable $85,000

Accrued Liabilities $68,000

Total Current Debt $153,000

Mortgage Payable $70,000

Preferred Stock $0

Common Stock $205,000

Retained Earnings $45,000

Total Debt and Equity $473,000

2012

Cash $100,000

Accounts Receivable $70,000

Inventory $100,000

Prepaid Expenses $10,000

Total Current Assets $280,000

Gross Plant and Equipment $311,000

Accumulated Depreciation ($66,000)

Total Assets $525,000

Accounts Payable $90,000

Accrued Liabilities $63,000

Total Current Debt $153,000

Mortgage Payable $0

Preferred Stock $120,000

Common Stock $205,000

Retained Earnings $47,000

Total Debt and Equity $525,000

Abrahams Manufacturing Company Income Statement for the Year Ended 12/31/2012

Sales $184,000

Cost of Goods Sold $60,000

Gross Profit $124,000

Selling, General and Administrative Expenses $44,000

Depreciation Expense $26,000

Operating Income $54,000

Interest Expense $4,000

Earnings Before Taxes $50,000

Taxes $16,000

Preferred Stock Dividends $10,000

Common Stock Dividends $22,000

Earnings Available to Common Shareholders $24,000

2. Using the information found in the financial statements above, compute the free cash flows for Abraham's Manufacturing Company.

3. Using the information found in the financial statements above, compute the financing cash flows for Abraham's Manufacturing Company.

4. Compose a narrative to interpret the results from questions 1 thru 3 above. What do you assume is happening with this business?