Quentin, Inc. Case Study: Statement of Cash Flows ntin, Inc., produces baby footwear. The company's peak year was 2013. Since then, both sales and profits have fallen. The following information is from the company's 2016 annual report (S in thousands): 2016 2015 2014 $1,500 900 1,050 675 900 2,700 $7,500 Net Income Accounts receivable (end of year) Inventory (end of year) Net cash provided by operations Capital expenditures Proceeds from sales of fixed assets 1,800 2,100 1,050 1,050 1,500 6,000 2,850 2,250 1,350 2,250 During 2017, short-term loans of $9 million became due. Quentin paid off only $2.25 million and was able to extend the terms on the other $6.75 million. Accounts payable continued at a very low level in 2017, and the company maintained a large investment in corporate equity securities, enough to generate a $3,000,000 addition to net income and $900,000 of cash dividends in 2017. Quentin neither paid dividends nor issued stock or bonds in 2017. Its 2017 statement of cash flows was as follows: Quentin, Inc. Statement of Cash Flows for the Year Ended December 31, 2017 (in thousands) Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided $1,650 by operating activities Add back noncash expenses: Depreciation and amortization Deduct noncash revenues: 600 Investment revenue from equity investments less $900 of dividends received Net decrease in accounts receivable Net decrease in inventory (2,100) 150 225 Net cash provided by operating activities Cash flows from investing activities $525 Purchase of fixed assets Insurance proceeds on building fire Sale of plant assets Purchase of corporate equity securities Net cash provided by investing activities (600) 3,000 3,750 2.250) Cash flows from financing activities 3,900 Principal payments on short-term debt to banks Purchase of treasury stock Net cash used for financing activities (2,250) (900) Net increase in cash Cash, December 31, 2016 13.150) 1,275 1.800