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Gross Margins and Cash Flow Sustainability

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Please see the attached case study and answer the following:

1. Compute 2004 income for Parque Corporation using the FIFO inventory flow assumption. Ignore income taxes.

2. Did Parque Corporation really earn a profit from its operating activities in 2004?

3. Given the circumstances described, what risks exist that could threaten ultimate repayment of the loan?

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Solution Summary

This solution calculates the finances for Parque Corporation.

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