The 20132014 income statement and balance sheet for Buffalo Best are presented in Tables 7.23 and 7.24. The WACC for Buffalo Best is 10% for both years. Review and comment on the performance of the company based on the following:

a. Liquidity, activity, and profitability

b. Uses and sources of funds

c. Value creation based on EVA analysis

TABLE 7.23 Income Statement of Buffalo Best Sales Cost of goods sold Gross margin Administrative and selling expenses R&D Depreciation EBIT Interest Taxable income Tax (30%) NOPAT Dividends Retained earnings Year 2014 (Thousands of Dollars) 18,000 11,000 7,000 3,500 500 1,000 2,000 100 1,900 570 1,330 330 1,000 Year 2013 (Thousands of Dollars) 17,000 10,500 6,500 3,200 500 1,000 1,800 100 1,700 510 1,190 190 1,000 TABLE 7.24 Balance Sheet of Buffalo Best Year 2014 ($) Year 2013 ($) Assets Cash and securities Accounts receivable Inventory Net fixed assets (investment minus accumulated depreciation) Other Total assets 5,000 15000 10,000 50,000 1,000 81,000 6,000 10,000 7,300 51,000 1,200 75,500 Liabilities Accounts payable Other short-term liabilities Long-term liabilities Total liabilities Equities at par value Capital surplus Retained carnings Total liabilities and owners' equities 20,000 26,000 1,000 47,000 1,000 12,000 21,000 81,000 15000 24,000 1,500 40,500 1,000 11,000 20,000 75,500