Question

VALIUM’S MEDICAL SUPPLY CORPORATION
Balance Sheet as of December 31, 2018 and 2017
(in thousands of dollars)
Assets	2018				2017				Liabilities and Equity	2018				2017
Current assets:									Current liabilities:
Cash and marketable securities	$	72			$	71			Accrued wages and taxes	$	46			$	41
Accounts receivable		187				181			Accounts payable		147				141
Inventory		312				291			Notes payable		131				131
Total	$	571			$	543			Total	$	324			$	313
Fixed assets:									Long-term debt	$	568			$	556
Gross plant and equipment	$	1,073			$	882			Stockholders’ equity:
Less: Accumulated depreciation		146				113			Preferred stock (6 thousand shares)	$	6			$	6
Net plant and equipment	$	927			$	769			Common stock and paid-in surplus (100 thousand shares)		120				120
Other long-term assets		134				134			Retained earnings		614				451
Total	$	1,061			$	903			Total	$	740			$	577
Total assets	$	1,632			$	1,446			Total liabilities and equity	$	1,632			$	1,446

VALIUM’S MEDICAL SUPPLY CORPORATION
Income Statement for Years Ending December 31, 2018 and 2017
(in thousands of dollars)
	2018				2017
Net sales	$	892			$	802
Less: Cost of goods sold		389				352
Gross profits	$	503			$	450
Less: Other operating expenses		47				41
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$	456			$	409
Less: Accumulated depreciation		33				31
Earnings before interest and taxes (EBIT)	$	423			$	378
Less: Interest		48				42
Earnings before taxes (EBT)	$	375			$	336
Less: Taxes		131				111
Net income	$	244			$	225
Less: Preferred stock dividends	$	6			$	6
Net income available to common stockholders	$	238			$	219
Less: Common stock dividends		75				75
Addition to retained earnings	$	163			$	144
Per (common) share data:
Earnings per share (EPS)	$	2.38			$	2.19
Dividends per share (DPS)	$	0.75			$	0.75
Book value per share (BVPS)	$	7.34			$	5.71
Market value (price) per share (MVPS)	$	8.37			$	6.19

Prepare a statement of cash flows for Valium’s Medical Supply Corporation. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

Statement of Cash Flows for Year Ending December 31, 2018 (in thousands of dollars) Cash flows from operating activities Additions (sources of cash): Subtractions (uses of cash): Net cash flow from operating activities Cash flows from investing activities Subtractions: Net cash flow from investing activities Cash flows from financing activities Additions: Subtractions: Net cash flow from financing activities Net change in cash and marketable securities

Answer 1

The cash flow statement is prepared as follows:

Statement of Cash Flows for Year Ending December 31, 2018
(in thousands of dollars)
Cash Flow from Operating Activities
Net Income	244
Additions (Sources of Cash)
Depreciation	33
Increase in Accrued Wages and Taxes (46-41)	5
Increase in Accounts Payable (147-141)	6
Subtractions (Uses of Cash)
Increase in Accounts Receivable (187-181)	-6
Increase in Inventory (312-291)	-21
Net Cash Flow from Operating Activities (A)	261
Cash Flow from Investing Activities
Subtractions:
Increase in Fixed Assets (1,073-882)	-191
Net Cash Flow from Investing Activities (B)	-191
Cash Flow from Financing Activities
Additions:
Increase in Long Term Debt (568-556)	12
Subtractions:
Payment of Common Stock Dividends	-75
Payment of Preferred Stock Dividends	-6
Net Cash Flow from Financing Activities (C)	-69
Net Change in Cash and Marketable Securities (A+B+C)	$1
Add Opening Cash and Marketable Securities	$71
Closing Cash and Marketable Securities	$72

_____

Notes:

1) Increase in current assets and decrease in current liabilities (if any) is recorded as a subtraction/decrease in cash flow from operating activities.

2) Decrease in current assets (if any) and increase in current liabilities is recorded as an addition/increase in cash flow from operating activities.