Statement of Cash Flow Analysis

Balance Sheet February 28 and January 31, 2004
Assets
Cash.............................................. $ 42,000 $ 37,000
Accounts receivable............................... 64,000 53,000
Merchandise inventory............................. 81,000 94,000

Total current assets............................ $187,000 $184,000

Plant and equipment:
Production equipment............................ 166,000 152,000
Less: Accumulated depreciation................ (24,000) (21,000)

Total Assets...................................... $329,000 $315,000

Liabilities
Short term debt................................... $ 44,000 $ 44,000
Accounts Payable.................................. 37,000 41,000
Other accrued liabilities......................... 21,000 24,000

Total current liabilities....................... $102,000 $109,000
Long Term Debt.................................... 33,000 46,000

Total Liabilities................................. $135,000 $155,000

Owner's Equity
Common stock, no par value, 40,000 shares
authorized 30,000 and 28,000 shares issued
respectively.................................... $104,000 $ 96,000
Retained earnings
Beginning balance............................... $ 64,000 $ 43,000
Net income for month............................ 36,000 29,000
Dividends....................................... (10,000) (8,000)

Ending Balance.................................. $ 90,000 $ 64,000

Total owner's equity.......................... $194,000 $160,000

Total liabilities and owner's equity.............. $329,000 $315,000
>>>>>>>>>>>>>>>>>>>>>>

Statement of Cash Flow

Cash Flow From Operating Activity
Net Income for Month ...........................36,000
Add Depreciation ..................................3,000
Increase Accounts Receivable ...............(11,000)
Decrease Merchandise Inventory ...........13,000
Decrease Accounts Payable ..................(4,000)
Decrease Other Accrued Liabilities .........(3,000)
Net Cash Flow from Operating Activity..... 34,000

Cash Flow From Investing Activity
Increase Production Equipment ..............(14,000)

Net Cash Flow From Investing Activity .......(14,000)

Cash Flow From FinancingActivity
Decrease Long Term Debt ...................(13,000)
Increase Common Stock ......................8,000
Payment of Dividend ...........................(10,000)

Net Cash Flow From FinancingActivity .....(15,000)

Net Change in Cash............................... 5,000

Opening Cash Balance ..........................37,000
Closing Cash Balance ...........................42,000

1. Please provide an overall evaluation of the big picture?
2. Were operating cash flows sufficient to meet investing needs and to pay dividends?
3. Were there significant changes to any line-item details that you think would require further explanation or analysis?

Which of the following financial assets might be least likely to have an active secondary market?

A) Common stock of a large firm
B) Bank loans made to smaller firms
C) Bonds of a major, multinational corporation
D) Debt issued by the United States Treasury
Why?