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Q4: Why can't we pay our shareholders a dividend? shouts your new boss at Polar Opposites. This income statement you prepared for me says we
Q4: "Why can't we pay our shareholders a dividend?" shouts your new boss at Polar Opposites. "This income statement you prepared for me says we earned $5 million in our first year!" You recently prepared the financial statements below. Although net income was $5 million, cash flow from operating activities was a negative $5 million. This just didn't make any sense to your boss. Make a cash flow statement and explain your boss the reason why can't you pay the dividend. POLAR OPPOSITES Income Statement For the year ended December 31, 2018 (Sin millions) Net sales Cost of goods sold Depreciation expense Operating expenses $65 (35) (4) 121) Net income SS POLAR OPPOSITES Balance Sheet December 31, 2018 ($ in millions) Cash $1 16 14 44 $75 Accounts receivable (net) Merchandise inventory Machinery (net) Total assets Accounts payable Accrued expenses payable Notes payable Common stock $7 9 29 25 Retained earnings 5 Total liabilities and stockholders' equity $75
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