Yesterday you received a call from your Aunt Emma. She read in the newspaper that Cuppa of Java Inc. had reported its most recent results. Her investment club purchased shares in the Cuppa of Java back in 2010 because they thought it was a sound Canadian company with significant growth potential. However changes in the coffee business and the continued expansion of Starbucks into the Canadian market has resulted in increased competition. The company tried to counteract these trends by buying up several smaller independent coffee chains in 2018 but the results appear to have been equivocal. To streamline operations, Cuppa of Java sold some of the lower volume and less profitable locations in 2019. The lockdown of the dine in portion of coffee stores for almost 9 months in 2020 as a result of the coronavirus pandemic decreased sales. The company responded to this threat by offering a bulk coffee delivery service that generated $6000 in extra revenues. Unfortunately, another coffee chain implemented a similar program in December 2020 so management is not sure how this will impact 2021 sales. Aunt Emma has some specific questions. To help you answer her questions she has forwarded you some information from the 2020 annual report. Specifically, she wants to know: Statement of Cash: do free cash flows tell us anything about the current financial performance and expected future performance? Is the companys working capital management good or bad? Does the companys policy of paying dividends make sense given the pandemic?

Statement of Cash 2020 2019 2018 Operating Activities Income (loss) from operations add: depreciation -$51 $381 $367 $394 $126 $355 $330 $761 $481 receivables inventory prepaids current liabilities Cash Flow from Operations $11 -$27 SO -$39 $49 SO -$79 -$413 $o $657 $646 $293 -$92 $607 $679 -$1,429 Investing Activities Property & equipment purchases Property & equipment sales Goodwill purchases Other LT assets purchases -$30 so SO SO -$255 $10 $334 $162 $251 -$2,865 -$726 -$30 -$5,020 Financing Activities lengteca debt common shares issued dividends paid -$114 SO -$500 -$868 $0 -$179 $2,608 $1,850 -$123 -$614 -$1,047 $4,335 net change in cash -$37 $117 -$39 beginning cash $296 $413 $452 ending cash $259 $296 $413 *in 2019 the company sold a group of small coffee shops at the NBV of the assets and the associated goodwill amount for this portion of the business