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HR7003 Managing Financial and Human Resources for Sustainable Business Success

Assignment HR7003 (Finance module)

Weighting: 50%

Cash Flows and Financial Statements at Surf Boards, Inc.

Surf Boards is a small company that manufactures and sells surfboards in Maldives. Tim Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company’s financial records are not well maintained.

The initial investment in Surf Boards was provided by Tim and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors have not required detailed financial statements from Tim. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tim is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his “sticks” (surfer lingo for boards) to other sellers.

Tim’s expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tim has previously prepared. At the urging of his investors, Tim has hired financial analyst Christine Wolfe to evaluate the performance of the company over the past year.

After rooting through old bank statements, sales receipts, tax returns, and other records, Christine has assembled the following information:

Surf Boards currently pays out 40% of net income as dividends to Tim and the other original investors, and it has a 21% tax rate. You are Christine’s assistant, and she has asked you to prepare the following:

1. An income statement for 2021 and 2022.

2. A balance sheet for 2021 and 2022.

3. A statement of cash flows for 2022.

4. Comment on Tim’s expansion plans.

Due date

November 20^th, 2023 (Full-time intake)

December 9^th, 2023 (Part-time intake)