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 8
Depreciation 90 90
Change in Accounts Receivable (50) (70)
Change in Inventory (20) (20)
Change in Accounts Payable 10 20
Cash From Operations 76 28

Investing Cash Flow

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

Financing Cash Flow

Issuance (Repayment) of Debt 100 (100)
Issuance (Repayment) of Equity – –
Payment of Dividends (30) (5)
Cash From Financing 70 (105)

Net Increase (Decrease) in Cash 46 (77)

Opening Cash Balance 450 496
Closing Cash Balance 496 419

PPE Start of Year 800 810

Capex 100
Depreciation (90) (90)
PPE End of Year 810 720

Practice Exercise - Cobble Hill Part 3 Page 3 of 4

Balance Sheet
ASSETS YEAR 1 YEAR 2

Current Assets
Cash 496 419 (77)
Accounts Receivable 80 150 70
Inventory 60 80 20
Total Current Assets 636 649 13

Non-Current Assets
Property, Plant & Equipment 810 720 -90
Total Non-Current Assets 810 720

Total Assets 1,446 1,369

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts Payable 30 50 20
Total Current Liabilties 30 50

Non-Current Liabilities
Long-Term Debt 400 300 -100
Total Non-Current Liabilities 400 300

Shareholders' Equity
Common Shares 1,000 1,000 0
Retained Earnings 16 19 3
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