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FIN 524
Financial Statement Exercise
Ozark’s 2019 income statement revealed sales of $1,200,000; EBITDA margin of 17.5%; interest expense
of $20,000; and an effective tax rate of 12.5%. No equipment was sold during the year. Equipment
purchases were made with cash. The increase in common stock and additional paid-in capital is due to
issuing additional shares for cash. Comparative balance sheets for Ozark follow.
Prepare a Statement of Cash Flows using the template provided.
2019 2018
Assets
Cash xxx 472,000
Accounts receivable 199,250 71,500
Inventories 250,000 278,800
Prepaids 13,000 xxx
Land 250,000 250,000
Building and equipment 1,500,000 1,300,000
Less: Accumulated depreciation -205,000 -175,000
Total assets 2,465,950 2,208,300
Liabilities
Accounts payable xxx 93,950
Accrued expenses 10,500 15,000
Income taxes payable 22,000 xxx
Stockholders’ equity
Common stock 710,000 700,000
Paid in capital in excess of par 990,000 800,000
Retained earnings 646,350 586,350
Total liabilities and equity xxx xxx
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Cash flows from operating activities:
Net income
Add (deduct) noncash effects on operating income
Depreciation expense
Change in accounts receivable
Change in inventory
Change in prepaid insurance
Change in accounts payable
Change in accrued exp
Change in income taxes payable
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of equipment
Net cash used by investing activities
Cash flows from financing activities:
Proceeds from issuing stock
Dividends on common
Net cash provided by financing activities
Net decrease in cash
Cash balance at January 1, 2019
Cash balance at December 31, 2019