I need both question (a and b) to be answered by analyzing the project. Part a need to have some numeral evidence. Part b question specifically net income and accounts payable from the statement of cash flows chart if there are more to question about please add on. Majority of the instructions are attached in the project.
Statement of Cash Flows Analysis Project Statement of Cash Flows Project Project Learning Objectives: 1. Demonstrate an understanding of financial accounting and reporting (II) concepts related to the Statement of Cash Flows. (LO #1) 2. Use analytic skills in problem solving to identify accounting problems, generate appropriate solutions, and make informed decisions. (LO #2) 3. Demonstrate professional competency in critical thinking and communication. (CSO #3) Project Description: Learners will use data available from the Statement of Cash Flows to analyze the liquidity, and solvency of a company. Directions: Use the data from the Vermont Teddy Bear Company to answer parts (a) and (b) presented below the case. Instructions: (a) Note that net income in the current year was only $17,523 compared to prior-year income of $838,955, but cash flow from operations was $236,480 in the current year and a negative $700,957 in the prior year. Explain the causes of this apparent paradox. (10 points) (b) Using the information provided by the Statement of Cash Flows, specify two questions that you would ask management if you were a financial analyst attempting to issue a buy / sell recommendation to clients. Explain why you would ask each question. (10 points) Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, company’s primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the operating sections of the most recent two years' statements of cash flows, along with summary information about investing and financing activities for those years. Current Year Prior Year Cash flow from operating activities: Net income $17,523 $838,955 Adjustments to reconcile net income to net Cash provided by operating activities Deferred income taxes (69,524) (146,590) Depreciation and amortization 316,416 181,348 Changes in current assets and current liabilities: Accounts receivable, trade (38,267) (25,947) Inventories (1,599,014) (1,289,293) Prepaid and other current assets (444,794) (113,205) Deposits and other assets (24,240) (83,044) Accounts payable 2,017,059 (284,567) Accrued expenses 61,321 170,755 Accrued interest payable, debentures (58,219) Other (8,960) Income taxes payable 117,810 Net Cash provided by (used for) operating activities 236,480 (700,957) Net cash used for investing activities (2,102,892) (4,422,953) Net cash (used for) provided by financing activities (315,353) 9,685,435 Net change in cash and cash equivalents (2,181,765) 4,561,525 Other Information: Current Liabilities 4,055,465 1,995,600 Total Liabilities 4,620,085 2,184,386 Net Sales 20,560,566 17,025,856