The operating activities section of Johann Manufacturing Company's statement of cash flows is shown below. In answering

Question:

The operating activities section of Johann Manufacturing Company's statement of cash flows is shown below. In answering the questions after the statement, assume that the net cash flows from Johann's investing and financing activities were zero (i.e., that the cash inflows within the investing and financing sections were offset by the cash outflows).
JOHANN MANUFACTURING COMPANY
Statement of Cash Flows
For the year ended December

Required:
Use the preceding information to answer the following questions. If a question cannot be answered based on the information given, indicate why.
a. Has the depreciation expense increased or decreased in comparison to last year?
b. Have the accounts receivable increased or decreased this year? Explain briefly.
c. Has the inventory increased or decreased this year? Explain how this affects cash.
d. Does the company appear to be more inclined, or less inclined, to prepay expenses than in the past? Does this help or hurt its cash position? Explain briefly.
e. Compared with last year, does the company seem to be relying more heavily, or less heavily, on trade credit to finance its activities? Explain briefly.
f. If you were a potential creditor, would you see any warning signs in the statement of cash flows that you would want to investigate before lending money to Johann Manufacturing? Explain briefly.
g. Johann has $2 million of bonds maturing in January 2012. It does not have a bond sinking fund (i.e., a cash fund that can be used to repay the bond debt) set aside to pay off the bonds. Do you think Johann will be able to meet its obligation to pay off the bonds, without obtaining additional long-term financing? Explain briefly.