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Submitted By mariyamab

Words 412

Pages 2

Words 412

Pages 2

Cash Flows and Financial Statements at Sunset Boards

Sunset Boards is a small company that manufactures and sells surfboards in Cape Town. Sipho, 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 Sipho and his friends and family. Since the initial investment was relatively small, and the company has only made surfboards for its own store, the investors haven’t required detailed financial statements from Sipho. But, thanks to word of mouth among professional surfers, sales have picked up recently, and Sipho is considering a major expansion. His plans include opening another surfboard shop in Knysna, as well as supplying other sellers. Sipho’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 lenders require more organized and detailed financial statements than Sipho has previously prepared. At the urging of his investors, Sipho has hired a financial analyst to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns and other records, the analyst has assembled the following information:

| |2007 |2008 |

|Cost of goods sold |84 310 |106 450 |

|Cash |12 165 |18 380 |

|Depreciation |23 800 |26 900 |…...

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