The following information has been extracted from the financial statements and notes of Peaches Ltd.

Required:

1. Using the above information, discuss the profitability and financial stability of PeachesLtd in 2014 and 2013.

2. Jeff, a financial analyst with an established brokerage firm says: The critical number I look for at any company is operating cash flow. If cash flow is less than earnings, I consider a company a poor performer and a poor investment prospect.

Briefly discuss whether you do or you do not agree with this comment. Explain why or why not.

Revenue Interest expense Income tax expense Profit Dividends Total assets Total debt Share capital Retained earnings 2014 $ 870 000 34 500 66 900 78 750 42 000 810 000 429 750 258 000 122 250 2013 $ 862 500 39 750 39 750 84 150 42 000 832 500 458 250 243 000 131 250