Sunset boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the companym is in charge of the designand sale of the surfboards, but his background is in 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 Tad. But thanks to word of mouth amoung professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawall, as well as supplying his "sticks" (surfer lingo 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 outsides plus some money burrowed 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 preformance of the company over the past year. Christina has assembles the following information: Sunset Boards Sunset Boards Sunset Boards Income Statement Balance Sheet Balance Sheet For the Year Ended December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018 Amount Amount Assets Amount Liabilities Assets Amount Liabilities Amount 501,441 $ 611,224 Cash 36,884 Accounts Payable 26,186 Cash 55,725 Accounts Payable 44,318 Less: Cost of Goods Sold 255,605 322,742 Accounts Recievable 26,186 Notes Payable 29,712 Accounts Recievable 33,901 Notes Payable 32,441 Selling and Administrative 50,268 65,610 Inventory 50,318 Current Liabilities $ 55,898 Inventory 67,674 Current Liabilities $ 76,759 Depreciation 72,158 81,559 Current Assets $ 113,388 Long-term Debt 160,689 Current Assets $ 157,300 Long-term Debt 175,3401 EBIT 123,410 141,313 Total Liabilities $ 216,587 Total Liabilities $ 252,099 Less:Interest 15,687 17,980 Net Fixed Assets 318,345 Owners' Equity $ 215,146 Net Fixed Assets 387,855 Owners' Equity $ 293,056 Earnings before Taxes 107,723 123,333 Total Assets $ 431,733 Total Liabilities and Equity 1$ 431,733 Total Assets $ 545,155 Total Liabilities and Equity $ 545,155 Less: Taxes 22,622 25,900 Net Income $ 85,101 $ 97,433 2017 2018 Sales Cost of goods sold $ 255,605 2017 172,946 2018 196,972 Operating Cash Flow $ $ Cash $ 322,742 55,725 81,559 36,884 72,158 15,687 Depreciation Cash Flow from Assets 2018 $ 22,852 Interest expense 17.980 Cash Flow to Creditors 2018 $ 3,329 Selling and administrative 50.268 65.610 Cash Flow to Stockholders 2018 $ 26,186 Accounts payable 44,318 19,473 Net fixed assets 318,345 387,855 Sales 501,441 611.224 $ $ Accounts receivable Working Capital Profit Margin Current Rario Quick Ratio 26,136 57,490 $ 0.49 $ 2.028480447 1.128305127 $ 80,541 0.47 2.049271095 1.17 Notes payable 33,901 32,441 175,340 67,674 29,712 160,689 50,318 Long-term debt Inventory 19.500 New equity 1. How would you describe Sunset Boards's cash flows for 2018? Write a brief discussion. 2. In light of your discussion in the previous question, what do you think about Tad's expansion plans? Sunset boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the companym is in charge of the designand sale of the surfboards, but his background is in 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 Tad. But thanks to word of mouth amoung professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawall, as well as supplying his "sticks" (surfer lingo 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 outsides plus some money burrowed 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 preformance of the company over the past year. Christina has assembles the following information: Sunset Boards Sunset Boards Sunset Boards Income Statement Balance Sheet Balance Sheet For the Year Ended December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018 Amount Amount Assets Amount Liabilities Assets Amount Liabilities Amount 501,441 $ 611,224 Cash 36,884 Accounts Payable 26,186 Cash 55,725 Accounts Payable 44,318 Less: Cost of Goods Sold 255,605 322,742 Accounts Recievable 26,186 Notes Payable 29,712 Accounts Recievable 33,901 Notes Payable 32,441 Selling and Administrative 50,268 65,610 Inventory 50,318 Current Liabilities $ 55,898 Inventory 67,674 Current Liabilities $ 76,759 Depreciation 72,158 81,559 Current Assets $ 113,388 Long-term Debt 160,689 Current Assets $ 157,300 Long-term Debt 175,3401 EBIT 123,410 141,313 Total Liabilities $ 216,587 Total Liabilities $ 252,099 Less:Interest 15,687 17,980 Net Fixed Assets 318,345 Owners' Equity $ 215,146 Net Fixed Assets 387,855 Owners' Equity $ 293,056 Earnings before Taxes 107,723 123,333 Total Assets $ 431,733 Total Liabilities and Equity 1$ 431,733 Total Assets $ 545,155 Total Liabilities and Equity $ 545,155 Less: Taxes 22,622 25,900 Net Income $ 85,101 $ 97,433 2017 2018 Sales Cost of goods sold $ 255,605 2017 172,946 2018 196,972 Operating Cash Flow $ $ Cash $ 322,742 55,725 81,559 36,884 72,158 15,687 Depreciation Cash Flow from Assets 2018 $ 22,852 Interest expense 17.980 Cash Flow to Creditors 2018 $ 3,329 Selling and administrative 50.268 65.610 Cash Flow to Stockholders 2018 $ 26,186 Accounts payable 44,318 19,473 Net fixed assets 318,345 387,855 Sales 501,441 611.224 $ $ Accounts receivable Working Capital Profit Margin Current Rario Quick Ratio 26,136 57,490 $ 0.49 $ 2.028480447 1.128305127 $ 80,541 0.47 2.049271095 1.17 Notes payable 33,901 32,441 175,340 67,674 29,712 160,689 50,318 Long-term debt Inventory 19.500 New equity 1. How would you describe Sunset Boards's cash flows for 2018? Write a brief discussion. 2. In light of your discussion in the previous question, what do you think about Tad's expansion plans