Maddox Smith Staff asked 4 years ago

Comparative Balance Sheets

Comparative balance sheets as at 31 December 2013 and 2014 for Chartowers Ltd are shown below. Chartowers Ltd Balance sheet as at 31 December 2014 2013 Assets Cash Accounts receivable Inventory Prepaid expenses Property, plant and equipment Less : Accumulated depreciation $ 4 835 11 372 22 034 1 421 63 972 (18 480) $ 3 554 8 529 15 637 2 132 49 755 (14 215) Total assets $ 85 154 $ 65 392 Liabilities and equity Accounts payable Debentures Paid-up capital (ordinary shares, par value $1) Retained earnings 7 108 12 794 35 000 30 252 10 490 35 000 19 902 Total liabilities and equity $ 85 154 $ 65 392 Additional Information:  Sales for 2014 were $180 000, and profit after tax was $16 350.  Cost of sales was $136 456.  Dividends of $6000 were declared and paid during the year.  Interest earned and received was $2340, and interest incurred and paid was $1654.  Tax expense for the period was $3000 and this was paid in the period.  Other expenses (including depreciation) were $24 880.  Property, plant and equipment were purchased for cash. Required: a) Prepare a statement of cashflows for Chartowers Ltd for 2014 (10 marks) b) Prepare a reconciliation of cash flows from operating activities and profit after tax for Chartowers Ltd for 2014 (5 marks) c) Evaluate the statement of cash flows for Chartowers Ltd, including a ratio analysis to discuss the liquidity, solvency and profitability of the company. Your evaluation should note any relevant action items regarding the business’ cash flow. (200-300 words max)