Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the companys financial records are not well maintained.

The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors havent required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his sticks (surfer lingo for boards) to other sellers.

Tads expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year.

After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the following information:

	2017	2018
Cost of goods sold	$ 255,605	$ 322,742
Cash	36,884	55,725
Depreciation	72,158	81,559
Interest expense	15,687	17,980
Selling and administrative	50,268	65,610
Accounts payable	26,186	44,318
Net fixed assets	318,345	387,855
Sales	501,441	611,224
Accounts receivable	26,136	33,901
Notes payable	29,712	32,441
Long-term debt	160,689	175,340
Inventory	50,318	67,674
New equity	0	19,500

Sunset Boards currently pays out 40 percent of net income as dividends to Tad and the other original investors, and it has a 21 percent tax rate. You are Christinas assistant, and she has asked you to prepare the following:

1. An income statement for 2017 and 2018.
2. A balance sheet for 2017 and 2018.
3. Operating cash flow for each year.
4. Cash flow from assets for 2018.
5. Cash flow to creditors for 2018.
6. Cash flow to stockholders for 2018.

QUESTIONS

1. How would you describe Sunset Boards cash flows for 2018? Write a brief discussion.
2. In light of your discussion in the previous question, what do you think about Tads expansion plans?

CASH FLOWS AND FINANCIAL STATEMENTS AT SUNSET BOARDS, INC. Sunset Boards in a small company that manufactures and sells surfboards in Malibu. Tad Maries, the founder of the company, is in charge of the design and sale of the surfboards, but his background is is surfing, not business. As a result, the company's financial records are not well maintained The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Thd Hat thanks to word of mouth among professional surfers, sales have picked up recently, and Tod is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his "sticks" (surferlingo for boards) to other sellers Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks Naturally, the new investors and creditoes require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors. Tad bas bired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the following information: Cost of foods sold Cash Deprecation Intereste Selling and administrative 2017 5.255.605 36,884 72.158 15,687 50.26 2018 5322,742 55725 81,559 17.900 65.610 Accounts payable Net fixed assets Accounts receivable Nous payable Long-term debt Inventory 311145 501441 20,136 29.712 44310 387,855 611224 33,901 32.441 175340 50.31 D 19.500 Sunset Boards currently pays out 40 percent of net income as dividends to Tad and the other original investors, and it has a 21 percent tax rate. You are Christina's assistant, and she has asked you to prepare the following 1. An income statement for 2017 and 2018 2. A balance sheet for 2017 and 2018 3. Operating cash flow for each year. 4. Cash flow from assets for 2018 5. Cash flow to creditors for 2018 6. Cash flow to Mockholders for 2018 QUESTIONS 1. How would you describe Sunset Boards' cash flows for 2018? Write a brief discussion 2. In light of your discussion in the previous question, what do you think about Tod's expansion plans