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Directions: Click the "Case-link" displayed above and use the information provided in Light Touch, Part B, to answer this question: Which of the following will have the greatest negative impact on future cash flow if performance remains the same as 2013? A change in the dividend payout rate to 40% An increase in the tax rate of 3% Ai se in interest rates A 2 day improvement in accounts receivable days on hand. Light Touch Part B Light Touch Balance Sheets (In $000s) As At December 31: 2013 2012 2011 $ $ $ ASSETS Current assets Cash Accounts receivable Inventory Prepaid expenses Other current assets Total current assets 0 2,454 3.480 416 0 2,158 3.168 600 1.440 2,500 302 400 5.242 240 224 180 5.746 6.574 Fixed assets 2,030 1.542 1.470 Other noncurrent assets 420 428 640 19,244 TOTAL ASSETS 3 7,708 3 7,140 $ $ 400 LIABILITIES AND EQUITY Current liabilities Short-term debt Current portion-LTD Accounts payable Accrued expenses Dividends payable Taxes payable Other current liabilities Total current liabilities 604 400 1.672 412 90 216 20 400 1.426 384 0 890 340 0 128 152 1,910 138 80 3.454 2.400 1.984 Long term debt 384 2.784 Deferred taxes 120 116 108 2.000 2,000 Stockholder's equity Paid-in capital Retained earings Total stockholders' equity 2,306 1.380 3,686 2,808 - 338 2,338 TOTAL LIABILITIES AND EQUITY $ 9.244 $ 7.708 $ 7.140 Working investment $ 3,850 $ 3,516 $ 2,710 Light Touch 3 Omega Performance Corporation. All Rent Reserved Light Touch Part B Light Touch Income Statements (In S000s) Years Ended December 31: 2013 2012 2041 $ 21,420 $ 206 Sales Depreciation expense Cash cost of goods sold Gross profit 14,694 6,520 18,000 162 12.498 5.340 $ 15,000 150 10,490 4,360 Operating expenses Interest expense Income before taxes 3,988 260 3,218 252 2,454 286 2,272 1,870 1,620 Taxes Net Income 1.128 892 1.144 978 $ 648 972 Dividends 512 508 388 Retained earnings $ 572 $ 470 584

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