Accounting Silver river Project
...tion than reality. The fact that the company invests in fixed assets for the last two years is on the one hand good, because it promises high cash inflows from operation activities in the future, but on the other hand it is not recommended for periods where the company faces liquidity problems. Last but not least, the cash flow from financing is positive which means that the company has been granted short term loans in order to cover its outstanding liabilities. This is not good since the average collection period for SRM is 54 days whereas the industry average is 32 days, meaning that the company will face trouble in paying back the loans on time. On top of all these, it issues dividents to its stockholders ! To sum up, the year cash flow are negative. The level is much lower than the year 2000 but this is due to an excessive short-term loan financing. c) Ability of short-term loans retirement on December 31, 2002. Based on the following facts, we have made an estimation of the Balance Sheet, Income Statement and Cash Flow Statement for 2002:...