The comparative statements of financial position of Menachem NV at the beginning and end of the year 2019 appear below.

Net income of ‚¬34,000 was reported, and dividends of ‚¬23,000 were paid in 2019. New equipment was purchased and none was sold.
Instructions
a. Prepare a statement of cash flows for the year 2019.
b. Compute the current ratio (current assets ÷ current liabilities) as of January 1, 2019, and December 31, 2019, and compute free cash flow for the year 2019.
c. In light of the analysis in (b), comment on Menachem's liquidity and financial flexibility.

Transcribed Image Text:

Menachem NV Statements of Financial Position Dec. 31, 2019 Jan. 1, 2019 € 37,000 Inc./Dec. € 22,000 €15,000 Inc. Assets Equipment Less: Accumulated depreciation-equipment (17,000) (11,000) 6,000 Inc. Accounts receivable 106,000 88,000 18,000 Inc. Cash 22,000 13,000 9,000 Inc. Total €148,000 €112,000 Equity and Liabilities € 80,000 Share capital-ordinary €100,000 20,000 Inc. Retained earnings 11,000 Inc. 28,000 17,000 Accounts payable 5,000 Inc. 20,000 15,000 €148.000 €112,000 Total