How would you describe Sunset Boards' cash flows for 2007 and 2008? Write a brief discussion.
An analysis of Sunset’s cash flows for 2007 and 2008 reveal the following items of significance. 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 2008, 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.