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L0422.calculating Cash Flows.Consider the following aoorevlated financialstatements for Cabo Wabo,Inc.:CABO WABO,INC.CABO WABO,INC.2014 Income StatementPartial Balance Sheets as of December 31,2013 and 20142014Sales20142013$47,8422013Costs23,992Liabilities andDepreciation4,040Assetsowners’equityInterest paidCurrent assets 3,198 3,389Current liabilities $1,381$2,030750Net fixed assets 14,826 15,500Long-term debt8,0869,434a.What is owners’equity for 2013 and 2014?b.What is the change in net working capital for 2014?C.In 2014,Cabo Wabo purchased $8,424 in new fixed assets.How much in fixedassets did Cabo Wabo sell?What is the cash flow from assets for the year?(Thetax rate is 40 percent.)d.During 2014,Cabo Wabo raised $2,535 in new long-term debt.How much long-term debt must Cabo Wabo have paid off during the year?What is the cash flowto creditors?L0423.Cash Flow Identity.Graffiti Advertising,Inc.,reported the following financialstatements for the last two years.Construct the cash flow identity for the company.Explain what each number means.2014 Income StatementSalesCost of goods sold$621,720Selling administrative334,427Depreciation137,206EBIT60,033Interest$90,054EBT21,226Taxes$68,828Net income27,531Dividends$41,297Addition to retained earnings$15,600$25,697GRAFFITI ADVERTISING,INC.CashBalance Sheet as of December 31,2013Accounts receivable$14,652Inventory20,893Accounts payableCurrent assets15,173Notes payable$10,53515,858Net fixed assets$50,718Current liabilities$378,869Long-term debt$26,393Total assetsOwners’equity$150,500$429,587Total liabilities and$252,694owners’equity$429,587c H A P 2 Financial Statements,Taxes,and Cash Flow1GRAFFITI ADVERTISING,INC.Balance Sheet as of December 31,2014Cash$15,737Accounts payable$11,563Accounts receivable23,209Notes payable18,113Inventory25,029Current liabilities$29,676Current assets$63,975Long-term debt$167,200Net fixed assets$446,942Owners’equity$314,041Total liabilities andTotal assets$510,917owners’equity$510,917



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