The consolidated statements of cash flows and related note disclosure for Le Chteau Inc. are in Exhibits

The consolidated statements of cash flows and related note disclosure for Le Château Inc. are in Exhibits 5.23A and 5.23B.
EXHIBIT 5.23A Le Château Inc.’s 2017 Consolidated Statements of Cash Flows

EXHIBIT 5.23B Excerpt from Le Château Inc.’s 2017 Annual Report

Required 

a. Determine the cash flow patterns for Le Château. In total, how much did Le Château’s cash and cash equivalents change during 2017? Was this an increase or a decrease? How did this compare with the previous year?

b. How did Le Château’s net loss in 2017 compare with the cash flows from operating activities? What was the largest difference between these two amounts?

c. What effect did the change in the company’s inventory balance have on cash flows from operating activities in 2017? What does this tell you about the company’s inventory balances? Does this cause any particular concerns given the nature of the company’s operations?

d. What effect did the change in the company’s trade and other payables have on cash flows from operating activities in 2017? What does this tell you about the balance owed to these creditors?

e. Calculate Le Château’s net free cash flow for 2017 and 2016. Is the trend positive or negative?

f. If you were a user of Le Château’s financial statements—a banker or an investor—how would you interpret the company’s cash flow pattern? How would you assess the risk of a loan to or an investment in Le Château?

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Consolidated Statements of Cash Flows Years ended January 28, 2017 and January 30, 2016 (in thousands of Canadian dollars) 2017 2016 OPERATING ACTIVITIES Net loss (37,226) (35,745) Adjustments to determine net cash from operating activities Depreciation and amortization [notes 8 and 9] 14,303 16,518 Write-off and net impairment of property and equipment and intangible assets [notes 8 and 9] 1,489 2,504 Amortization of deferred lease credits (1,546) (1,873) Deferred lease credits 225 32 Stock-based compensation 335 515 Provision for onerous leases (78) 137 Finance costs 5,096 3,922 Interest paid (2,938) (3,080) (621) Deposits (20,125) (17,906) Net change in non-cash working capital items related to operations [note 21] 3,395 12,397 Income taxes refunded 300 350 Cash flows related to operating activitles (7,428) (14,161) FINANCING ACTIVITIES Increase (decrease) in credit facility (3,488) 9,418 (470) Financing costs Proceeds of long-term debt 4,185 27,500 Repayment of long-term debt Cash flows related to financing activitles (848) (2,006) 21,536 12,755 INVESTING ACTIVITIES Additions to property and equipment and intangible assets [notes 8 and 9] (4,516) (9,115) Cash flows related to Investing activitles (4,516) (9,115) Increase (decrease) In cash (bank Indebtedness) (1,740) 811 Cash (bank indebtedness), beginning of year (545) 1,195 Cash (bank Indebtedness), end of year (545) 266 21. Changes In non-cash worklng capltal The cash generated from non-cash working capital items is made up of changes related to operations in the following accounts: January 28, January 30, 2016 2017 Accounts receivable 188 845 Income taxes refundable (190) (300) Inventories 12,462 1,767 Prepaid expenses Trade and other payables (219) (306) 350 1,625 Deferred revenue (194) (236) Net change In non-cash working capltal Items related to operatlons 12,397 3,395