Corporate Finance

Table of content:
1. An income statement for 2004 and 2005 3
2. A balance sheet for 2004 and 2005 3
3. Operating cash flow for each year 4
4. Cash flow from assets for 2005 4
5. Cash flow to creditors for 2005 5
6. Cash flow to stockholders for 2005 5
7. A brief discussion about Sunset Boards’ cash flows 5
8. Discussion about Tad’s expansion plans 5
9. The problems that can come up with financial statements analysis 6
10. References 8

1. An income statement for 2004 and 2005.
According to the information given in the case, the following income statement for 2004 and 2005 for Sunset Boards was generated by our group:
Table 1: Income statement for 2004 and 2005
2004 2005
1. Sales $165,390 $201,600
2. Cost of goods sold 84,310 106,450
3. Selling & administrative expenses 16,580 21,640
4. Depreciation 23,800 26,900
5. EBIT (1-2-3-4) 40,700 46,610
6. Interest paid 5,180 5,930
7. EBT (5-6) 35,520 40,680
8. Taxes 7,104 8,136
9. Net income (7-8) 28,416 32,544
10. Dividends paid 8,525 9,763
11. Addition to retained earnings (9-10) 19,891 22,781
Taxes2004 = $35,520 * 0.2 = $7,104
Taxes2005 = $40,680 * 0.2 = $8,136
Dividends2004 = Net income*30% = $28,416 * 0.3 = $8,525
Dividends2005 = $32,544 * 0.3 = $9,763
2. A balance sheet for 2004 and 2005.
Table 2: Balance sheet for 2004 and 2005
Assets Liabilities & Owners Equity
2004 2005 2004 2005
Cash $12,165 $18,380 Accounts payable $21,500 $24,350
Accounts receivable 8,620 11,182 Notes payable $9,800 $10,700
Inventory 18,140 24,894     Total   $31,300 $35,050
    Total 38,925 54,456 Long-term debt $53,000 $61,000
Net fixed assets 105,000 134,000     Total $53,000 $61,000
Owners' equity $59,625 $92,406
    Total $59,625 $92,406
Total assets $143,925 $188,456 Total liabilities OE $143925 $188456

For the reason that, there is no information about the owners’ equity for 2004, we calculated it ourselves. We know... [continues]

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