Understanding Financial Siatements and Cash Flow APTER CASE Cas h Flows and Financial Statements at Sunset Board 2015 nctures unset Boards is a small company that $203,963 $257523 founder of the company, is in charge of the design and Cost of goods sold sale of the surfboards, but his background is in surfingCash 29,429 31,267 57,576 65.076 12,53014,345 40,110 52,351 and sells surfboards in Malibu. Tad Marks, the est expense not business. As a result, the company's financial re cords are not well maintained and administrative The initial investment in Sunset Boards was pro- Sckng nies expenses 52,015 Accounts payable vided by Tad and his friends and family. Because the ini- tial investment was relatively small, and the company Net flixed assets Sales 254,017 316,825 400,111 487,712 has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad But thanks to word of mouth among professional surf- ers, sales have picked up recently, and Tad is consider 20,854 27,050 23,708 25,885 128,218 143,971 43,884 60,222 Accounts receivable Notes payable debt 0 24,192 ing a major expansion. His plans include openingNew equity another surfboard store in Hawai, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Sunset Boards currently pays out 50 percent of net in- come as dividends to Tad and the other original inves tors, and has a 20 percent tax rate. You are Jameson's assistant, and he has asked you to prepare the Tad's expansion plans require a significant invest- ment, which he plans to finance with a combination of additional funds from outsiders plus some money bor- rowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Jameson Reid to evaluate the performance of the com- following 1. An income statement for 2015 and 2016. 2. A balance sheet for 2015 and 2016. 3. Operating cash flow for each year pany over the past year Ater rooting through old bank statements, sales re. 4. Cash flow from assets for 2016 ceipts, tax returns, and other records, Jameson has as- 5. 6. Cash flow to creditors for 2016. Cash flow to stockholders for 2016. sembled the following information: QUESTIONS How would you describe Sunset Boards' cash flows for 2016? Write a brief discussion. 1. 2. In light of your discussion in the previous what do you think about Tad's expansion plans Understanding Financial Siatements and Cash Flow APTER CASE Cas h Flows and Financial Statements at Sunset Board 2015 nctures unset Boards is a small company that $203,963 $257523 founder of the company, is in charge of the design and Cost of goods sold sale of the surfboards, but his background is in surfingCash 29,429 31,267 57,576 65.076 12,53014,345 40,110 52,351 and sells surfboards in Malibu. Tad Marks, the est expense not business. As a result, the company's financial re cords are not well maintained and administrative The initial investment in Sunset Boards was pro- Sckng nies expenses 52,015 Accounts payable vided by Tad and his friends and family. Because the ini- tial investment was relatively small, and the company Net flixed assets Sales 254,017 316,825 400,111 487,712 has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad But thanks to word of mouth among professional surf- ers, sales have picked up recently, and Tad is consider 20,854 27,050 23,708 25,885 128,218 143,971 43,884 60,222 Accounts receivable Notes payable debt 0 24,192 ing a major expansion. His plans include openingNew equity another surfboard store in Hawai, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Sunset Boards currently pays out 50 percent of net in- come as dividends to Tad and the other original inves tors, and has a 20 percent tax rate. You are Jameson's assistant, and he has asked you to prepare the Tad's expansion plans require a significant invest- ment, which he plans to finance with a combination of additional funds from outsiders plus some money bor- rowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Jameson Reid to evaluate the performance of the com- following 1. An income statement for 2015 and 2016. 2. A balance sheet for 2015 and 2016. 3. Operating cash flow for each year pany over the past year Ater rooting through old bank statements, sales re. 4. Cash flow from assets for 2016 ceipts, tax returns, and other records, Jameson has as- 5. 6. Cash flow to creditors for 2016. Cash flow to stockholders for 2016. sembled the following information: QUESTIONS How would you describe Sunset Boards' cash flows for 2016? Write a brief discussion. 1. 2. In light of your discussion in the previous what do you think about Tad's expansion plans