Question 9 Iqaluit Water Company Ltd. (Iqaluit) is a bottler and marketer of bottled water. Iqaluit was established many years ago in response to the demand for healthful, refreshing drinks. Iqaluit sells its products to distributors in Canada, the United States, and Europe. In the last few years, Iqaluit's performance has deteriorated significantly in the face of increased competition and high marketing and promotion costs. Management is concerned that the company is in financial distress and may be headed for serious problems that will threaten its survival. Some of Iqaluit's shareholders have approached you for advice about the company's status. The have provided you with Iqaluit's most recent cash flow statements and have asked you to prepare a report that addresses the prospects for the company. Required: Prepare the report. Iqaluit Water Company Ltd. Statement of Cash Flows For the Years Ended July 31, 2017 2016 Cash from Operations Net loss ($ 812,000) ($952,000) Items not affecting cash Depreciation 278,500 310,000 (Gain) Loss on disposal of assets (325,000) 225,000 Writedown of assets 150,000 95,000 (708,500) (322,000) Changes in non-cash working capital accounts Accounts receivable 208,000 242,000 Inventory 150,000 90,000 Prepaids 85,000 101,000 Accounts payable and accrued liabilities (88,000 (110,000 Cash from operations (353,500 1,000 Financing activities Issue of short-term debt 300,000 225,000 Bank loans 425,000 500,000 Repayment of long-term debt (450,000) (450,000) Dividends paid (1,000,000 (1,000,000) Cash outflows from financing activities (725,000 (725,000 Investing activities Purchase of plant, property, and equipment 172,000) (12,000) Proceeds from sale of equipment 950,000 485,000 Sale of land" 625,000 Cash inflows from investing activities 1,503,000 473,000 Decrease in cash and cash equivalents 424,500 (251,000) Cash and cash equivalents, beginning of year 224,000 475,000 Cash and cash equivalents, end of year $ 648,500 $ 224,000 gahit hold land as an investment that it decided to set in 2017. The land was not used in the company's bottling operations, Question 9 Iqaluit Water Company Ltd. (Iqaluit) is a bottler and marketer of bottled water. Iqaluit was established many years ago in response to the demand for healthful, refreshing drinks. Iqaluit sells its products to distributors in Canada, the United States, and Europe. In the last few years, Iqaluit's performance has deteriorated significantly in the face of increased competition and high marketing and promotion costs. Management is concerned that the company is in financial distress and may be headed for serious problems that will threaten its survival. Some of Iqaluit's shareholders have approached you for advice about the company's status. The have provided you with Iqaluit's most recent cash flow statements and have asked you to prepare a report that addresses the prospects for the company. Required: Prepare the report. Iqaluit Water Company Ltd. Statement of Cash Flows For the Years Ended July 31, 2017 2016 Cash from Operations Net loss ($ 812,000) ($952,000) Items not affecting cash Depreciation 278,500 310,000 (Gain) Loss on disposal of assets (325,000) 225,000 Writedown of assets 150,000 95,000 (708,500) (322,000) Changes in non-cash working capital accounts Accounts receivable 208,000 242,000 Inventory 150,000 90,000 Prepaids 85,000 101,000 Accounts payable and accrued liabilities (88,000 (110,000 Cash from operations (353,500 1,000 Financing activities Issue of short-term debt 300,000 225,000 Bank loans 425,000 500,000 Repayment of long-term debt (450,000) (450,000) Dividends paid (1,000,000 (1,000,000) Cash outflows from financing activities (725,000 (725,000 Investing activities Purchase of plant, property, and equipment 172,000) (12,000) Proceeds from sale of equipment 950,000 485,000 Sale of land" 625,000 Cash inflows from investing activities 1,503,000 473,000 Decrease in cash and cash equivalents 424,500 (251,000) Cash and cash equivalents, beginning of year 224,000 475,000 Cash and cash equivalents, end of year $ 648,500 $ 224,000 gahit hold land as an investment that it decided to set in 2017. The land was not used in the company's bottling operations