Corporate Finance – Comparative Balance Sheets and Cash Flow Statement Worksheet

Corporate Finance – Comparative Balance Sheets and Cash Flow Statement Worksheet

See attached Excel spreadsheet.

Explain how thesix highlighted accounts impacted cash flow from one year to the next.The accounts either added or reduced the cash balance from one year to the next.I.e., the accounts were either a Source orUse of cash.

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The target to increase cash to $70,000 was not achieved by the end of the financial year 2014. This is as a result of an increase in inventory from $352,740 to $422,819, meaning that the cash used in purchasing the inventory was not fully recovered probably caused by slow conversion of inventory to sales. The value of goods sold on credit also reduced such that the value of accounts receivables decreased by $58,563. A reduction in accounts payables means that more goods were sold in cash, thus the account was a source of cash for Bob.

(322 words)