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Firms A, B and C all show a large increase in the cash account on their balance sheet from 2006 to 2007. Which firm would you prefer to invest in?

Firm A which generated the cash by a large positive cash flow from operating activities.

Firm B which generated the cash by a large positive cash flow from investing activities

Firm C which generated the cash by a large positive cash flow from financing activities

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Irving Heathcote
Irving HeathcoteLv2
28 Sep 2019

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Related questions

1. A purchase of new equipment on a note payable under the direct method would be reported:
a. As a separate disclosure as a non-cash transaction b. in the investing section of the cash flow statement c. in the operating section of the cash flow statement d. in the financing section of the cash flow statement

2. An increase in long-term mortgage payable would mean a:
a. Increase in cash flow from investing activities b. decrease in cash flow from investing activities c. increase in cash flow from financing activities d. decrease in cash flow from financing activities

3. A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and $5,440 cash for the interest. Under the direct method of reporting interest, the $5,440 would be listed as a : a. operating activity b. financing activity c. investing activity d. separate disclosure only

12 -
The summary are cash flows Statements for 3 roughly equal size companies
($ Millions)
a b c
Net Cash Flow from operating activities $ (300.00) $ (300.00) $ 300.00
net Cash used in investing activitites $ (900.00) $ (30.00) $ (90.00)
Net Cash from Financing activities $ 1,200.00 $ 210.00 $ (240.00)
Cash balance at the beginning of the year $ 150.00 $ 150.00 $ 150.00
a. calculate each company cash balance at the end of the year
b. Explain what might cost company C's net cash from financing activities to be negative
c. Looking at company A & B, which company would you prefer to own? Why?
d. In company C's cash flow statement cause for any concern on the part of C's management or shareholders ? Why? or why not?

The following is cash flow data for Rocket Transport:


Cash dividend $ 93,000
Purchase of bus $ 33,000
Interest paid on debt $ 25,000
Sales of old equipment $ 52,500
Repurchase of stock $ 102,000
Cash payments to suppliers $ 125,000
Cash collections from customers $ 430,000
a.

Find the net cash provided by or used in investing activities. (Input the amount as positive value. Omit the "$" sign in your response.)


Net cash (Click to select)provided byused in investing activities $


b.

Find the net cash provided by or used in financing activities. (Input the amount as positive value. Omit the "$" sign in your response.)


Net cash (Click to select)provided byused in financing activities $


c.

Find the net increase or decrease in cash for the year. (Input the amount as positive value. Omit the "$" sign in your response.)


Net (Click to select)increasedecrease in cash $

rev: 10_10_2014_QC_55792

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