Generate Cash Flow Statement for Wicked Good Cupcakes (WGC) Overview: In this as
ID: 2407603 • Letter: G
Question
Generate Cash Flow Statement for Wicked Good Cupcakes (WGC)
Overview:
In this assignment, you will be creating a cash flow statement based on the Wicked Good Cupcakes income statement and balance sheet.
Instructions:
Using the provided Income Statement and Balance Sheet, generate a Cash Flow Statement. You may have to make some assumptions in the process; list them in a comment column of your Cash Flow Statement. You will then write a narrative, summarize your findings and observations.
Consider the following as you develop the statement and summary:
1. What can you say about their profit vs cash situation?
2. Are they in danger of running out of cash?
3. What does their, as Warren Buffet refer, ‘owning earnings’ (free cash flow) look like?
Requirements: .
• Create a cash flow statement and include assumptions in the comments
• Length: two to three-page narrative of your findings and observations
• All questions posed must be addressed completely.
• All sources used must be properly cited in APA format.
Wicked Good Cupcakes
Income Statement
in $ 100
Full Year
Full Year
Ended 12/31/2015
Ended 12/31/2016
Units Sold
87918
114641
Sales
$12,650
$15,813
Cost of Goods Sold
Labor
$2,210
$2,763
Materials
$2,045
$2,556
Overhead
$5,685
$7,106
Delivery
$305
$381
Total CoGS
$10,245
$12,806
Gross Margin
$2,405
$3,006
Expense
Selling Expense
$875
$1,094
General & Admin
$585
$731
Total Expenses
$1,460
$1,825
Operating profit (EIBT)
$945
$1,181
Interest
$190
$238
Profit before Taxes
$755
$944
Income Taxes
$272
$340
Net Income
$483
$604
Dividends
$100
$125
Retained Earnings
$383
$479
Depreciation
$575
$719
Net cash after divends
$958
$1,198
Add back tax-adjusted interest
$122
$153
Add back divends
$100
$125
Cash flow from operations
$1,180
$1,475
Wicked Good Cupcakes
Balance Sheet
Full Year
Full Year
Assets
Ended 12/31/2015
Ended 12/31/2016
Current Assets
Cash
1450
1,250
Accounts Receivable
4250
3,050
Raw Materials
1500
1,500
Finished Goods
4050
3,300
Total Current Assets
11250
9,100
Fixed Assets
Land
2500
2,500
Plant and equipment
20800
19,300
Less Accumulated depreciation
8350
8,000
Net plant and equipment
12450
11300
Total Fixed Assets
14950
13800
Other Assets
1250
1,250
Total Assets
27450
24,150
Liabilities and Net Worth
Current Liabilities
Accounts Payable
1120
950
Notes Payable
3000
2,500
Due Contractor
3400
500
Accrued taxes
1250
940
Total current liabilities
8770
4,890
Long-term liabilities
8500
8,500
Common Stock
4250
4,300
Retained earnings
5930
6,460
Total Liabilities and net worth
27450
24,150
Wicked Good Cupcakes
Income Statement
in $ 100
Full Year
Full Year
Ended 12/31/2015
Ended 12/31/2016
Units Sold
87918
114641
Sales
$12,650
$15,813
Cost of Goods Sold
Labor
$2,210
$2,763
Materials
$2,045
$2,556
Overhead
$5,685
$7,106
Delivery
$305
$381
Total CoGS
$10,245
$12,806
Gross Margin
$2,405
$3,006
Expense
Selling Expense
$875
$1,094
General & Admin
$585
$731
Total Expenses
$1,460
$1,825
Operating profit (EIBT)
$945
$1,181
Interest
$190
$238
Profit before Taxes
$755
$944
Income Taxes
$272
$340
Net Income
$483
$604
Dividends
$100
$125
Retained Earnings
$383
$479
Depreciation
$575
$719
Net cash after divends
$958
$1,198
Add back tax-adjusted interest
$122
$153
Add back divends
$100
$125
Cash flow from operations
$1,180
$1,475
Explanation / Answer
BALANCE SHEET OF THE CASH FLOW PROCESSED BY USING DIRECT METHOD:
Other Adjustments:
1) profit or cash situation
The cash value is higher than the revenue of the company
2) No,There is no danger for running short of cash...
3) warren buffet said that the free cash flow of the firms indicate's a good amount of moneu as free cash flow.the situation provide better bargaining of power..
if any doubts feel free to ask.....
PARTICULARS 2015 2016 Cash flow from operating Activities Net Income $483 $604 Add expenses not Requiring Cash: Depreciation $573 $719 Amortization of Goodwill **** **** other **** ****Other Adjustments:
Add Reduction in accounts receivable ***** -1000$ Add increase in Wages Payable ***** 563$ Add increase in Accounts payable **** **** Subtract Decrease in Accounts Payable ***** -500$ subtract Increase in Inventory *** **** Subtract Increase in Prepaid Expenses *** **** Other *** *** Net Cash from Operating Activities 1058$ 386$ Cash Flows from Investing Activities Increase in Marketable Securities *** *** Purchase of New Equipment 12450$ 11300$ other *** *** Net Cash Used for Investing Activities 12450$ 11300$ Cash Flows from Financing Activities Payment of Mortgage Principal *** *** Transfer From/(To) Parent *** *** other **** **** Net Cash from Financing Activities $0 $0 NET INCREASE/(DECREASE) IN CASH 13508$ 11686$ CASH, BEGINNING OF YEAR 1250$ 1450$ CASH, END OF YEAR 14758$ 1250$Related Questions
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