[ Statement of Cash Flows and Cash Burn or Build ]
Salza Technology Corporation increased its salesfrom $375,000 in 2012 to $450,000 in 2013 as shown in the firm ' s income statements presented below.
LeAnn Sands, chief executive officer and founder of the firm, expressed concern that the cash accountand the firm ' s marketable securities declined substantially between 2012 and 2013.
Salza ' s complete bal-ance sheets are also shown. Ms. Sands is seeking your assistance in the preparation of a statement of cash flows for Salza Technology.
A. Prepare a statement of cash flows for 2013 for Salza Technology Corporation.
B. Provide a brief description of what happened in terms of cash flows (both inflows and outflows) forSalza between 2012 and 2013.
Salza Technology Corporation Annual Income Statements (in $ Thousands)
2012 2013
Net sales $375 $450
Less: Cost of goods sold -225 -270
Gross Profit 150 180
Less: Operating Expenses -46 -46
Less: Depreciation -25 -30
Less: Interest -4 -4
Income Before Taxes 75 100
Less: Income taxes -20 -30
Net Income $55 $70
Cash Dividends $17 $20
Balance Sheets as of December 31 (IN $ Thousands)
2012 2013
Cash $39 $16
Accounts Rece 50 80
Inventories 151 204
Total current assets 240 300
Gross fixed assets 200 290
Less accumulated depreciation -95 -125
Net Fixed Assets 105 165
Total Assets $345 $465
Accounts payable $30 $45
Bank Loan 20 27
Accured Liabilities 10 23
Total Current Liabilities 60 95
Long-Term Debt 15 15
Common Stock 85 120
Retained Earnings 185 235
Total Liabilities & Equity $345 $465