Two years of information is given for Spoke company so that you can generate an Indirect Method Cash Flow Statement. Generate a spreadsheet to create your Statement of Cash Flows. Submit your spreadsheet via Blackboard and be sure to answer completely all FIVE of the questions below on your spreadsheet. An example spreadsheet is provided. Due June 28th by 11:59 PM. The Spoke Company, a major retailer of bicycles and accessories, operates several stores and is publicly traded. The comparative statement of financial position and income statement for Spoke as of December 31, 2014, are shown below The company is preparing its statement of cash flows. Spoke Company Comparative Statement of Financial Position as of December 31, 2014 and December 31, 2013 12/31/14 12/31/13 Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses Total current assets Plant assets Plant assets Minus: Accumulated depreciation Net plant assets Total assets $ 43,250 $ 20,000 70,000 50,000 210,000 250,000 9,000 7,000 $332,250 $327,000 $600,000 $510,000 (150,000) (125,000) $450,000 $385,000 $782,250 $712,000 $123,000 $115,000 47,250 72,000 27,000 25,000 $197,250 $212,000 Current liabilities Accounts payable Salaries payable Interest payable Total current liabilities Noncurrent liabilities Bonds payable Total liabilities Shareholders' equity Common stock ($10 par) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 70,000 $100,000 $267,250 $312,000 $370,000 $280,000 145,000 120,000 $515,000 $400,000 $782,250 $712,000 Spoke Company Income Statement For the Year Ended December 31, 2014 $1,255,250 (712,000) $ 543,250 Sales Cost of goods sold Gross profit Expenses Salary expense Interest expense Other expenses Depreciation expense Total expenses Operating income Income tax expense Net income 252,100 75,000 8,150 25,000 $ 360,250 $ 183,000 (43,000) $ 140,000 The following is additional information about Spoke's transactions during the year ended December 31, 2014: All goods were purchased on account, and all accounts payable reflect purchases of goods for resale. Plant assets costing $90,000 were purchased by paying $40,000 in cash and issuing 5,000 shares of stock at par value. To raise cash, Spoke issued 4,000 shares of common stock at par value. No penalties were assessed for the retirement of bonds. Cash dividends of $115,000 were declared and paid at the end of the fiscal year. 1.) Explain (a) how cash flow from operating activities is calculated using the indirect method and (b) how it differs from the direct method. 2.) Using the indirect method, calculate the net cash flow from operating activities for Spoke Company for the year ended December 31, 2014. Explain your process and how the amounts were calculated. 3.) Calculate the cash flows from investing and financing activities for Spoke Company for the year ended December 31, 2014. Explain your process and how the amounts were calculated. 4). Complete the Statement of Cash Flows Reference the connections between the numbers on the Statement of Cash Flows with the amounts from your balance sheet and your income statement. For example, how does the change in cash on the statement of cash flows reference to the balance sheet? 5). Analyze the Cash Flow Information: Companies and analysts tend to use income statement and balance sheet information to evaluate financial performance. In fact, financial results presented to the investing public typically focus on earnings per share. However, analysis of cash flow information is becoming increasingly important to managers, auditors, and outside analysis. The three measures commonly used to evaluate performance related to cash flows are: 1) Operating Cash Flow Ratio. 2) Capital Expenditure Ratio. 3) Free Cash Flow. Give an explanation of each common measure by giving the equation for each of the three common measures and explain what does each ratio tell us? Use the information for Spoke Company in your explanation and be sure to calculate each measure for Spoke Company. Two years of information is given for Spoke company so that you can generate an Indirect Method Cash Flow Statement. Generate a spreadsheet to create your Statement of Cash Flows. Submit your spreadsheet via Blackboard and be sure to answer completely all FIVE of the questions below on your spreadsheet. An example spreadsheet is provided. Due June 28th by 11:59 PM. The Spoke Company, a major retailer of bicycles and accessories, operates several stores and is publicly traded. The comparative statement of financial position and income statement for Spoke as of December 31, 2014, are shown below The company is preparing its statement of cash flows. Spoke Company Comparative Statement of Financial Position as of December 31, 2014 and December 31, 2013 12/31/14 12/31/13 Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses Total current assets Plant assets Plant assets Minus: Accumulated depreciation Net plant assets Total assets $ 43,250 $ 20,000 70,000 50,000 210,000 250,000 9,000 7,000 $332,250 $327,000 $600,000 $510,000 (150,000) (125,000) $450,000 $385,000 $782,250 $712,000 $123,000 $115,000 47,250 72,000 27,000 25,000 $197,250 $212,000 Current liabilities Accounts payable Salaries payable Interest payable Total current liabilities Noncurrent liabilities Bonds payable Total liabilities Shareholders' equity Common stock ($10 par) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 70,000 $100,000 $267,250 $312,000 $370,000 $280,000 145,000 120,000 $515,000 $400,000 $782,250 $712,000 Spoke Company Income Statement For the Year Ended December 31, 2014 $1,255,250 (712,000) $ 543,250 Sales Cost of goods sold Gross profit Expenses Salary expense Interest expense Other expenses Depreciation expense Total expenses Operating income Income tax expense Net income 252,100 75,000 8,150 25,000 $ 360,250 $ 183,000 (43,000) $ 140,000 The following is additional information about Spoke's transactions during the year ended December 31, 2014: All goods were purchased on account, and all accounts payable reflect purchases of goods for resale. Plant assets costing $90,000 were purchased by paying $40,000 in cash and issuing 5,000 shares of stock at par value. To raise cash, Spoke issued 4,000 shares of common stock at par value. No penalties were assessed for the retirement of bonds. Cash dividends of $115,000 were declared and paid at the end of the fiscal year. 1.) Explain (a) how cash flow from operating activities is calculated using the indirect method and (b) how it differs from the direct method. 2.) Using the indirect method, calculate the net cash flow from operating activities for Spoke Company for the year ended December 31, 2014. Explain your process and how the amounts were calculated. 3.) Calculate the cash flows from investing and financing activities for Spoke Company for the year ended December 31, 2014. Explain your process and how the amounts were calculated. 4). Complete the Statement of Cash Flows Reference the connections between the numbers on the Statement of Cash Flows with the amounts from your balance sheet and your income statement. For example, how does the change in cash on the statement of cash flows reference to the balance sheet? 5). Analyze the Cash Flow Information: Companies and analysts tend to use income statement and balance sheet information to evaluate financial performance. In fact, financial results presented to the investing public typically focus on earnings per share. However, analysis of cash flow information is becoming increasingly important to managers, auditors, and outside analysis. The three measures commonly used to evaluate performance related to cash flows are: 1) Operating Cash Flow Ratio. 2) Capital Expenditure Ratio. 3) Free Cash Flow. Give an explanation of each common measure by giving the equation for each of the three common measures and explain what does each ratio tell us? Use the information for Spoke Company in your explanation and be sure to calculate each measure for Spoke Company