CAYETANO, SYRILL S.

1. Prepare an analysis of the statement. Construct a statement of cash flows for Axtel for 2016.

Axtel Company
Statement of Financial Position
December 31, 2016
ASSETS 2015 2016
Cash 3,514 2,875
Accounts Receivable 6,742 5,583
Inventory 2,573 3,220
Current Assets 12,829 11,678
Non-Current Assets
Gross 22,478 24,360
Accumulated Depreciation (12,147) -13313
Net 10,331 11,047
Total Assets 23,160 22,725

Liabilities
Accounts Payable 1,556.00 1,702.00
Accruals 268.00 408.00
Current Liabilities 1,824.00 2,110.00
Long-term Debt 7,112.00 6,002.00
Total Liabilities 8,936.00 8,112.00
Equity 14,224.00 14,613.00
Total Liabilities and Equity 23,160.00 22,725.00

Axtel Company
Statement of Comprehensive Income
Year Ended December 31, 2016

2016
Sales 36,227
Cost of Goods Sold 19,925
Gross profit 16,302
Operating expenses 10,868
Profit before interest expense 5,434
interest expense 713
Profit before tax 4,721
Tax 1,605
Profit 3,116

Axtel Company
Cash Flow Statement
Year Ended December 31, 2016
2016
Net Income 3,116
Adjustement to reconcile net income to net cash
provided by operating activities
Depreciation expense 1,166
Decrease in accounts receivable 1,159
Increase in inventory (647)
Increase in accounts payable 146
Increase in accruals 140 1,964

Net Cash provided by Operating Activities 5,080

Net Cash from Investing Activities

Purchase of non-current assets (1,882)

Net Cash from Financing Activities

Payment of non-current liabilities (1,110)
Retirement of Stocks (1,000.00)
Payment of Dividends (1,727.00)
Net increase in cash during the year (639)
Cash, beginning 3,514

Cash, 12/31/16 2,875

 Seymour Corp.
Statement of Financial Position
December 31, 2016
ASSETS 2015 2016
Cash 2,745 1,071
Receivable 19,842 24,691
Inventory 10,045 15,621
Current Assets 32,632 41,383
Non-Current Assets
Gross 80,128 97,432
Accumulated Depreciation (60,225) -68076
Net 19,903 29,356
Total Assets 52,535 70,739

LIABILITIES
Accounts Payable 3,114.00 6,307.00
Accruals 768.00 914.00
Current Liabilities 3,882.00 7,221.00
Long-term Debt 36,490.00 48,128.00
Total Liabilities 40,372.00 55,349.00
Equity 12,163.00 15,390.00
Total Liabilities and Equity 52,535.00 70,739.00

Some of cash is borrowings and money was used to accquire new assets, payment of dividends, payment of accounts
payable and accrued expenses.

B.
Seymour Corp.
Statement of Comprehensive Income
December 31, 2016
2016
Sales 88,765
Cost of Goods Sold 39,506
Gross profit 49,259
Operating expenses 34,568
Profit before interest expense 14,691
interest expense 4,312
Profit before tax 10,379
Tax 4,152
Profit 6,227

Seymour Corp.
Statement of Cash Flow
December 31, 2016
2016
Net Income 6,227
Adjustement to reconcile net income to net cash
provided by operating activities
Depreciation expense 7,851
Increase in accounts receivable (4,849)
Increase in inventory (5,576)
Increase in accounts payable 3,193
Increase in accruals 146 765

Net Cash provided by Operating Activities 6,992

Net Cash from Investing Activities

Purchase of non-current assets (17,304)

Net Cash from Financing Activities

Proceeds from non-current liabilities 11,638
 Payment of Dividends (3,000)

Net increase in cash during the year (1,674)

Cash, beginning 2,745

Cash, 12/31/16 1,071

 C. There may be additional cash outflows which would lead to less cash balance. As per the credit strategy, revisit
credit terms and suggest for less credit durations.

1. Account Receivable Turnover =Sales

Ave. Rec.

88,765,000
(19842000)+(24691000)
2
3.99000000000

2. Days in Receivable 365 days

3.99000000000

91.56 days
Per current Financial Statement, the receivable turnover is 4 times and 92 days in receivables. If a new product will be
offered for sale, aim for a less number of days for credit term.
A.
Protek Company
Common Size Income Statement
For the periods ending December 31, 2016
2014 2015 2016 ###
Cash 30 40 ###
52
Accounts Receivable 175 351 590
###
Inventory 90 151 300
###
Current Assets 295 542 942
Non-Current Assets
Gross 1,565 2,373 2,718
###
Accumulated Depreciation (610) (860) (1,135)
###
Net 955 1,513 1,583
Total Assets 1,250 2,055 2,525

Accounts Payable 56 81 134

###
Accruals 15 20 ###
30
Current Liabilities 71 101 164
Long-term Debt 630 1,260 1,600
###
Total Liabilities 701 1,361 1,764
Equity 549 694 771
Total Liabilities and Equity 1,250 2,055 2,535

Protek Company
Common Size Income Statement
For the periods ending December 31, 2016
2014 2015 2016
Sales 1578 2106 3265
Cost of Goods Sold 631 906 1502
Gross profit 947 1,200 1,763
Expenses:
Marketing 316 495 882
Research and Development 158 211 327
Administration 126 179 294
Total Expenses 600 885 1,503
Profit before interest expense 347 315 260
interest expense 63 95 143
Profit before tax 284 220 117
Tax 86 66 35
Profit 198 154 82

Trend is that the gross profit is getting lower from 60% in 2014 to 54% in 2016. It is
because cost of goods sold percentage from 2014 is 40% which went up to 46% in 2016.
If the gross profit trend is getting lower, then net profit also becomes smaller.
B.
Protek Company
Statement of Cash Flows
Year ended December 31, 2016
2015 2016
Net Income 154 82
Adjustement to reconcile net income to net cash
provided by operating activities
Depreciation expense 250 275
Increase in accounts receivable (176) (239)
Increase in inventory (61) (49)
Increase in accounts payable 25 53
Increase in accruals 5 43 10 (50)

Net Cash provided by Operating Activities 197 32

Net Cash from Investing Activities

Purchase of non-current assets (808) (345)

Net Cash from Financing Activities

Proceeds from non-current liabilities 630 340
Difference in equity (9) (15)

Net increase in cash during the year 10 12

Cash, beginning 30 40

Cash, 12/31/16 40 52

Protek Company
Statement of Changes in Equity
Year ended December 31, 2016
2015 2016
Beginning 549 694
Net income 154 82
Should be balance 703 776
reflected in financial position 694 771
Difference 9 5
Unbalance amount in financial position 10
Total Difference 9 15

In 2015 & 2016, the money is coming from borrowings. In 2015 & 2016, the money went to acquisition of new assets.
Free cash flows is satisfactory having a 25% increase from 2014 to 2015 and 35% from 2015 to 2016. It will likely have a
positive free cash flows in the future as seen from 2014 to 2016 changes.

C.

Having large cash flows does not mean bigger profit. You can see here that there are so much cash but achieving a lower
net profit. Connect management of cash with achieving a lower cost of goods sold percentage. From the internet or online
orders, look for low cost of raw materials, search for workers as well who can render for low salary rates or consider piece
rates. As for factory overhead, analyze peak or lean hours, same on factory overhead by turning off electrical connections
during slack time.