The income statement for the year ended December 31, 2011, and the balance sheets at December 31, 2010, and December 31, 2011, for the service company(see attached)

1. Prepare a statement of cash flows for the year ended December 31, 2011, using (a) the direct method and(b) the indirect method.

2. Why is the statement of cash flows important to the company and to parties external to the company?

3. Evaluate the way in which the company spent its cash during the year. Do you think the company is in a sound cash position?

4. Calculate the firm's free cash flow for the most recent year.

ment 1 of 2 (0 complete) i More Info Tim's Service Company Comparative Balance Sheets December 31, 2011 December 31, 2010 $ $ 63,430 11,900 210 890 3,100 14,600 440 570 (amounts in thousands) Assets: Current assets: Cash Accounts receivable Supplies Prepaid advertising Total current assets Property, plant, and equipment Equipment Less: accumulated depreciation Total property, plant, and equipment Total assets. Liabilities and Stockholders' Equity Rohit S 76,430 $ 18.710 $ $ 52.000 23,200 48,000 18,000 28,800 $ 105,230 30,000 48,710 $ Print Done ... 4. nt 1 of 2 (0 complete) More Info - Tim's Service Company Income Statement For the Year Ended December 31, 2011 $ 180,000 $ (amounts in thousands, except earnings per share) Service revenue Expenses: Wages and salaries Advertising Rent Depreciation Supplies Total expenses Income before taxes Income taxes Net income Earnings per share 60,800 11,600 3,200 5,200 5,800 86,600 $ 93,400 32,690 $ 60.710 0.75 Print Done Clear All 3 ment 1 of 2 (0 complete) i More Info Tim's Service Company Comparative Balance Sheets December 31, 2011 December 31, 2010 $ $ 63,430 11,900 210 890 3,100 14,600 440 570 (amounts in thousands) Assets: Current assets: Cash Accounts receivable Supplies Prepaid advertising Total current assets Property, plant, and equipment Equipment Less: accumulated depreciation Total property, plant, and equipment Total assets. Liabilities and Stockholders' Equity Rohit S 76,430 $ 18.710 $ $ 52.000 23,200 48,000 18,000 28,800 $ 105,230 30,000 48,710 $ Print Done ... 4. nt 1 of 2 (0 complete) More Info - Tim's Service Company Income Statement For the Year Ended December 31, 2011 $ 180,000 $ (amounts in thousands, except earnings per share) Service revenue Expenses: Wages and salaries Advertising Rent Depreciation Supplies Total expenses Income before taxes Income taxes Net income Earnings per share 60,800 11,600 3,200 5,200 5,800 86,600 $ 93,400 32,690 $ 60.710 0.75 Print Done Clear All 3