Question 1 Prepare and Analyze a Cash Flow Statement

Assets	2019	2018
Cash	24000	26000
Accounts receivable	31000	21000
Inventory	90000	70000
Patent	60000	0
Equipment	220000	150000
Accumulated depreciation equipment	(15000)	(5000)
Total	410000	262000
Liabilities and Shareholders Equity
Accounts payable	50000	40000
Bonds Payable	190000	140000
Common stock	88000	63000
Preferred stock	10000	4000
Retained earnings	72000	15000
Total	410000	262000

Additional information:

1. Net income was $75,000
2. Dividends of were paid in cash during the year
3. Depreciation expense was $14,000
4. Common and preferred stock were issued for cash.
5. Old equipment with an original cost of 30,000 and accumulated depreciation of 4000 was sold for $21,000. New equipment was purchased for cash.
6. Bonds were issued for cash.
7. A patent was purchased for cash.

Required:

1. Create a Cash Flow Statement in good format for the Wonder Vaccine Company for the year ended Dec 31, 2019.
2. Analyze the cash flow statement. Calculate the free cash flow, current cash debt coverage ratio and cash debt coverage ratio and analyze the results.
3. If you were an investor, would you invest in Wonder Vaccine Company? Explain fully.
4. If you were a banker, would you loan money to Wonder Vaccine Company? Explain fully.