Chapter 2 Homework - Vladimir Ducard Chapter 2 Homework 1...

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Vladimir Ducard Chapter 2 Homework 1. How would you describe Sunset Boards' cash flows for 2015? Write a brief discussion. Sunset generated significant cash flows from operations, so one must assume that the core of the business (building and selling surfboards) is a viable ongoing enterprise. Nevertheless, without the infusion of additional equity in 2015, the overall cash flow for Sunset would have been negative and they would have been forced to either obtain additional debt financing or reduce the dividend payout ratio. Sunset has invested significantly in fixed assets in both years of its history. If the forecast for the future includes additional fixed assets, additional sources of funding will have to be obtained. 2. In light of your discussion in the previous question what do you think about Tad's expansion plans? Sunset would be entering a uncertain new market with new competitive dynamic relationship with competitors. Based on the cash flow statements, significant external funding would be required regardless of the decision to change the dividend payout ratio.
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