You Are Given The Following Information For Barko Industriesbarko Ind

You are given the following information for Barko Industries: Barko Industries Balance Sheet (Partial) Year 3 Year 4 Cash $70,000 $9,640 AR 70,000 85,000 Inventories 87,000 84,000 Accounts Payable 48,000 51,000 Barko Industries Income Statement For the Year Ending December 31, Year 4 Sales $560,000 Operating Expenses $420,000 Depreciation Expense 46,000 Income Before Taxes $94,000 Income Tax Expense $37,600 Net Income $56,400 Other Data: Barko Industries sold an asset and recorded a loss on the sale of $8,700. The sale price was $220,000 and the asset was originally purchased for $360,000. Dividends paid in Year 4 were $22,460. Required: Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method. What conclusions could you arrive at regarding the cash position of the firm? What information was provided in the statement of cash flows that was not evident if just the balance sheet and the income statement were examined? Part Two: Final Project Week 3: Investing and Financing Activities; Interim Presentation of Findings Examine the statement of cash flows for the companies you selected in Week 1 for the most recent year. Address the following concerns: What are the two largest investing activities and financing activities for each firm? Compare and contrast the investing and financing activities of the two companies. Evaluate the investing and financing strategies of the two firms? Provide a rationale for your opinion as to the effectiveness of each of the strategies. Required: Address the above-noted questions. Prepare a Microsoft PowerPoint presentation of 5-10 slides that summarizes your findings for the two companies for Weeks 1 to 3 of the Final Project. Deliverables: By Tuesday, March 4, 2014, submit your answers to the questions in Part One, using an MS Excel document, to the W3: Assignment 2 Dropbox. Use good form, show all your calculations and conclusions. Name your document SU_FIN4060_W3_A2_Part1_LastName_FirstInitial. By Tuesday, March 4, 2014, address the issues for the Final Project, Week 3 outlined in Part Two, in a report using an MS Word document, and submit your document to the W3: Assignment 2 Dropbox. Use good form, and cite all sources using APA format. Name your document SU_FIN4060_W3_A2_Part2_LastName_FirstInitial. By Tuesday, March 4, 2014, create a Microsoft PowerPoint presentation consisting of 5-10 slides that summarizes your findings for the Final Project over the last three weeks. Post this assignment in the Discussion Area and comment on at least two other submissions. Name your document.

Paper For Above instruction

The task involves preparing a comprehensive statement of cash flows for Barko Industries using the indirect method, analyzing the company's cash position, and understanding the deeper financial insights provided by cash flow statements beyond balance sheets and income statements. Additionally, the assignment extends to reviewing the financial strategies of two companies over recent years, focusing on their investing and financing activities, and presenting findings in a PowerPoint presentation suitable for academic evaluation.

Preparation of the Statement of Cash Flows

The first part of this assignment requires analyzing Barko Industries’ financial data for Year 4 to construct a statement of cash flows. The indirect method begins with net income, adjusts for non-cash expenses like depreciation, and accounts for changes in working capital components such as accounts receivable, inventories, and accounts payable. In this scenario, net income stands at $56,400, with depreciation adding back $46,000. Changes in working capital from Year 3 to Year 4 indicate increases in accounts receivable and payable, influencing cash flows accordingly.

The sale of an asset at a loss of $8,700, with a sale proceeds of $220,000, further affects cash flow calculations. Original purchase cost and sale price establish the asset's book value, which, combined with recorded losses, provide insights into the cash impacts of asset disposal. Dividends paid of $22,460 reflect distributions to shareholders, affecting financing activities.

Constructing the cash flow statement involves calculations such as: starting from net income, adding back depreciation, adjusting for working capital fluctuations, accounting for the cash effect of asset sale, and deducting dividends. The resulting cash flows from operating, investing, and financing activities clarify the firm's liquidity and cash management strategies during Year 4.

Analysis of Cash Position and Additional Insights

Analysis of the completed statement of cash flows reveals that Barko Industries experienced a significant decrease in cash from Year 3 to Year 4, with ending cash declining from $70,000 to $9,640. This indicates potential liquidity challenges or strategic cash management decisions, such as asset sales or dividend payouts, impacting cash reserves.

Beyond the raw data, the cash flow statement unveils pivotal information not evident from balance sheets and income statements alone. For instance, cash flows from investing activities specify asset acquisitions or disposals and their cash implications. Financing activities detail borrowing, debt repayment, and dividend distributions, revealing how a firm funds its operations and growth. Operating cash flows demonstrate the company's ability to generate cash from core activities, a key indicator of financial health.

Such insights are essential for stakeholders to assess liquidity, solvency, and operational efficiency, making cash flow statements indispensable tools for comprehensive financial analysis.

Part Two: Comparing Investing and Financing Strategies

In the second part of the project, the focus shifts to analyzing the most recent year's cash flow statements of two companies selected in Week 1. Major investing activities often include acquisitions of property, plant, and equipment or asset sales, while financing activities involve issuing or repurchasing debt or equity and dividend payments.

By evaluating and contrasting these activities, one can discern each company's strategic priorities. For example, a company heavily investing in expansion or modernization might exhibit significant capital expenditures, whereas a firm prioritizing debt repayment or dividend distribution may be more focused on shareholder value or financial stability.

Assessing the effectiveness of these strategies involves considering the implications for future growth, risk management, and financial flexibility. Companies that balance investing in growth while maintaining manageable debt levels often demonstrate sustainable strategies. Conversely, aggressive investing without adequate financing considerations may pose risks, while excessive reliance on debt could threaten financial health.

The comparative analysis, supported by financial ratios, cash flow patterns, and strategic objectives, provides a comprehensive understanding of each company's financial management and strategic direction.

Presentation and Submission

The findings will be summarized in a PowerPoint presentation consisting of 5-10 slides. This presentation will outline the largest investing and financing activities for each firm, compare their strategies, and evaluate their effectiveness, supported by data and analysis from the cash flow statements. The presentation will serve as a succinct visual summary suitable for academic and professional review.

All submissions must adhere to proper formatting, include all calculations, and cite sources using APA style. The Excel file will detail all computations for the cash flow statement, while the Word document will offer a thorough analysis. The PowerPoint presentation will synthesize the key findings for efficient communication and review.

Conclusion

This project provides a comprehensive review of corporate financial strategies through the lens of cash flow analysis. It emphasizes understanding how companies manage liquidity, fund growth, and fulfill financial commitments, which are critical to evaluating overall financial health and strategic effectiveness. Conducting such analyses enhances financial literacy and supports sound decision-making in managerial and investment contexts.

References

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