Unit 2 Exercise Questions Flamingo, Inc. 2019 statement of comprehensive income (S in millions) Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable income Less: Taxes $1,384 605 180 599 80 519 156 $363 $254 109 2019 $350 Net income Addition to retained earnings Dividends paid Flamingo, Inc. 2018 and 2019 Statement of financial positions (S in millions) 2018 2019 2018 Cash $100 $121 Accounts payable $400 Accounts rec. 350 425 Notes payable 390 Inventory 440 410 Total $790 Total $890 $956 Long-term debt 500 Net fixed assets 1,556 1,704 Owner's equity Common stock 600 Retained 556 earnings Total 1,156 Total assets $2,446 $2,660 Total liabilities $2,446 370 $720 550 580 810 1,390 $2,660 Q1. Show detailed calculations of CFFA under two approaches we have discussed in our class (60 marks) Q2. Comment on the cashflow performance of the company in the years of 2018 and 2019.20 marks) Q3. If you were to advise Flamingo Inc. for the year 2020, what recommendations would you propose regarding the capital structure of the company? Why? (20 marks)