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Sunset Boards is a small company that manufactures and sells surfboards in Malibu.




Sunset Boards is a small company that manufactures and sells surfboards in Malibu.;Tad Marks, the founder of the company, is in charge of the design and sale of the;surfboards, but his background is in surfing, not business. As a result, the company's;financial records are not well maintained.;The initial investment in Sunset Boards was provided by Tad and his friends and family.;Because the initial investment was relatively small, and the company has made;surfboards only for its own store, the investors haven't required detailed financial;statements from Tad. But thanks to word of mouth among professional surfers, sales;have picked up recently, and Tad is considering a major expansion. His plans include;opening another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo;for boards) to other sellers.;Tad's expansion plans require a significant investment, which he plans to finance with a;combination of additional funds from outsiders plus some money borrowed from banks.;Naturally, the new investors and creditors require more organized and detailed financial;statements than Tad has previously prepared. At the urging of his investors, Tad has;hired financial analyst Paula Wolfe to evaluate the performance of the company over the;past year. After rooting through old bank statements, sales receipts, tax returns, and;other records, Paula has assembled the following information;2009;2010;$277,855;$338,688;141,641;178,839;Selling&administrative;27,854;36,355;Depreciation;39,983;45,192;$68,377;$78,302;8,702;9,962;EBT;$59,675;$68,340;Taxes;11,935;13,668;$47,740;$54,672;Sales;Costofgoodssold;EBIT;Interest;Netincome;Dividends;Additionto;retained;earnings;$23,870;$27,336;23,870;27,336;BalancesheetasofDec.31,2009;Cash;$20,437 Accountspayable;Accountsreceivable;14,482 Notespayable;Inventory;30,475 Currentliabilities;Currentassets;$36,120;16,464;$52,584;$65,394;Longtermdebt;$89,040;Netfixedassets;$176,400 Owners'equity;$100,170;Totalassets;$241,794 Totalliab.&equity;$241,794;BalancesheetasofDec.31,2010;Cash;$30,880 Accountspayable;Accountsreceivable;18,785 Notespayable;Inventory;41,821 Currentliabilities;Currentassets;$40,908;17,976;$58,884;$91,486;Longtermdebt;$102,480;Netfixedassets;$214,184 Owners'equity;$144,306;Totalassets;$305,670 Totalliab.&equity;$305,670;1.;How would you describe Sunset Boards' cash flows for;2010? Write a brief discussion.;2. In light of your discussion in the previous question what;do you think about Tad's expansion plans?


Paper#28357 | Written in 18-Jul-2015

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