(Solution) - The comparative balance sheets for Karidis Ceramics Inc for December -(2025 Original AI-Free Solution)

Paper Details

The comparative balance sheets for Karidis Ceramics, Inc., for December 31, 20×9 and 20×8 are presented on the next page. During 20×9, the company had net income of $96,000 and building and equipment depreciation expenses of $80,000 and $60,000, respectively. It amortized intangible assets in the amount of $20,000; purchased investments for $116,000; sold investments for $150,000, on which it recorded a gain of $34,000; issued $240,000 of long-term bonds at face value; purchased land and a warehouse through a $320,000 mortgage; paid $40,000 to reduce the mortgage; borrowed $60,000 by issuing notes payable; repaid notes payable in the amount of $180,000; declared and paid cash dividends in the amount of $36,000; and purchased treasury stock in the amount of $20,000.
Karidis Ceramics, Inc.
Comparative Balance Sheets
December 31, 20x9 and 20x8

Liabilities and Stockholders' Equity
Required
1. Using the indirect method, prepare a statement of cash flows for Karidis Ceramics, Inc.
2. Why did Karidis Ceramics experience a decrease in cash in a year in which it had a net income of $96,000? Discuss and interpret.
3. Compute and assess cash flow yield and free cash flow for 20×9. Why is each of these measures important in assessing cash-generating ability?