Practice Exercise - Cobble Hill Part 3 Strictly Confidential

Table of Contents

Cobble Hill Financial Statements

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Construct the Cash Flow Statement for Cobble Hill Inc.

Produce a Cash Flow Statement for Cobble Hill Inc. for Year 2

Cash Flow Statement

YEAR 1 YEAR 2

Operating Cash Flow

Net income 46
Depreciation 90
Change in Accounts Receivable (50)
Change in Inventory (20)
Change in Accounts Payable 10
Cash From Operations 76

Investing Cash Flow

Property, Plant & Equipment (100)
Cash From Investing (100)

Financing Cash Flow

Issuance (Repayment) of Debt 100
Issuance (Repayment) of Equity –
Payment of Dividends (30)
Cash From Financing 70

Net Increase (Decrease) in Cash 46

Opening Cash Balance 450
Closing Cash Balance 496

PPE Start of Year 800

Capex 100
Depreciation (90)
PPE End of Year 810

Practice Exercise - Cobble Hill Part 3 Page 3 of 4

Balance Sheet
ASSETS YEAR 1 YEAR 2

Current Assets
Cash 496 419
Accounts Receivable 80 150
Inventory 60 80
Total Current Assets 636 649

Non-Current Assets
Property, Plant & Equipment 810 720
Total Non-Current Assets 810 720

Total Assets 1,446 1,369

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts Payable 30 50
Total Current Liabilties 30 50

Non-Current Liabilities
Long-Term Debt 400 300
Total Non-Current Liabilities 400 300

Shareholders' Equity
Common Shares 1,000 1,000
Retained Earnings 16 19
Total Shareholders' Equity 1,016 1,019

Total Liabilities & Equity 1,446 1,369

Total Assets 1,446 1,369

Total Liabilities & Equity 1,446 1,369
Difference – –

Income Statement
YEAR 1 YEAR 2

Revenues 510 550

Cost of Sales (290) (380)
Gross Profit 220 170

Other Operating Expenses (40) (50)

EBITDA 180 120

Depreciation (90) (90)

Operating Profit (EBIT) 90 30

Interest Expenses (Finance Cost) (24) (18)

Profit Before Tax (EBT) 66 12

Tax Expense at 30% (20) (4)

Net Income (EAT) 46 8

Dividends (30) (5)

Retained Earnings 16 3

Practice Exercise - Cobble Hill Part 3 Page 4 of 4