Question 9 Iqaluit Water Company Ltd. (Iqaluit) is a bottler and marketer of bottled water. Iqaluit was established many years ago in response to the demand for healthful, refreshing drinks, Iqaluit sells its products to distributors in Canada, the United States, and Europe. In the last few years, Iqaluit's performance has deteriorated significantly in the face of increased competition and high marketing and promotion costs. Management is concerned that the company is in financial distress and may be headed for serious problems that will threaten its survival. Some of Iqaluit's shareholders have approached you for advice about the company's status. The have provided you with Iqaluit's most recent cash flow statements and have asked you to prepare a report that addresses the prospects for the company Required: Prepare the report. Igal uit Water Company Ltd. Statement of Cash Flows For the Years Ended July 31. 2017 2016 ($812,000) $952,000) Castroen Operations Net loss Items not affecting cash Depreciation Gain Loss on disposal of assets Write down of assets 278,500 (325,000) 150,000 (708,500) 310,000 225,000 95,000 (322.000) 208,000 150,000 35.000 (38 000) 353.500 212.000 90.000 101,000 110,000 1.000 Changes in non-cash working capital accounts Accounts receivable Inventory Prepaids Accounts payable and accrued liabilities Cash from operations Financing activities Issue of short-term debt Bank loans Repayment of long-term debt Dividends paid Cash outflows from financing activities Investing activities Purchase of plant, property, and equipment Proceeds from sale of equipment Sale of land Cashflows from investing activities Decrease in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 300,000 425 000 1450,000) 1000000) 725.000 225.000 500.000 1450,000 1000000 125.000 (12.000 000 (72.000 950.000 525000 1.503.000 424 500 473000 251 000 224 000 500 475.000 $ 224 000 S Question 9 Iqaluit Water Company Ltd. (Iqaluit) is a bottler and marketer of bottled water. Iqaluit was established many years ago in response to the demand for healthful, refreshing drinks, Iqaluit sells its products to distributors in Canada, the United States, and Europe. In the last few years, Iqaluit's performance has deteriorated significantly in the face of increased competition and high marketing and promotion costs. Management is concerned that the company is in financial distress and may be headed for serious problems that will threaten its survival. Some of Iqaluit's shareholders have approached you for advice about the company's status. The have provided you with Iqaluit's most recent cash flow statements and have asked you to prepare a report that addresses the prospects for the company Required: Prepare the report. Igal uit Water Company Ltd. Statement of Cash Flows For the Years Ended July 31. 2017 2016 ($812,000) $952,000) Castroen Operations Net loss Items not affecting cash Depreciation Gain Loss on disposal of assets Write down of assets 278,500 (325,000) 150,000 (708,500) 310,000 225,000 95,000 (322.000) 208,000 150,000 35.000 (38 000) 353.500 212.000 90.000 101,000 110,000 1.000 Changes in non-cash working capital accounts Accounts receivable Inventory Prepaids Accounts payable and accrued liabilities Cash from operations Financing activities Issue of short-term debt Bank loans Repayment of long-term debt Dividends paid Cash outflows from financing activities Investing activities Purchase of plant, property, and equipment Proceeds from sale of equipment Sale of land Cashflows from investing activities Decrease in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 300,000 425 000 1450,000) 1000000) 725.000 225.000 500.000 1450,000 1000000 125.000 (12.000 000 (72.000 950.000 525000 1.503.000 424 500 473000 251 000 224 000 500 475.000 $ 224 000 S