APPLIED TECHNOLOGY INC. AND FOUR STAR CATERING LTD. ARE ASKING YOU TO RECOMMEND THEIR SHARES TO YOUR CLIENTS. BECAUSE APPLIED AND FOUR -STAR EARN ABOUT THE SAME NET INCOME AND HAVE SIMILAR FINANCIAL POSITIONS, YOUR DECISION DEPENDS ON THIER STATEMENT OF CASH FLOWS, WHICH ARE SUMMARIZED AS FOLLOWS:   APPLIED. FOUR STAR NET CASH PROVIDED BY OPERATING ACTIVITIES   $30,000   $70,000 CASH PROVIDED BY(USED FOR) INVESTING ACTIVITIES         PURCHASES OF PROPERTY, PLANT, AND EQUIPMENT $(20,000)   $(100,000)   SALE OF PROPERTY, PLANT, AND EQUIPMENT 40,000 20,000 10,000 90,000 CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES         ISSUANCE OF COMMON SHARES   -   30,000 PAYING OFF LONG -TERM DEBT   (40,000)   - NET INCREASE IN CASH   $10,000   $10,000                     1. BASED ON THIER CASH FLOWS, WHICH COMPANY LOOKS BETTER? GIVE YOUR REASONS. 2. USE CASH-FLOW DATA TO EVALUATE AN INVESTMENT.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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APPLIED TECHNOLOGY INC. AND FOUR STAR CATERING LTD. ARE ASKING YOU TO RECOMMEND THEIR SHARES TO YOUR CLIENTS. BECAUSE APPLIED AND FOUR -STAR EARN ABOUT THE SAME NET INCOME AND HAVE SIMILAR FINANCIAL POSITIONS, YOUR DECISION DEPENDS ON THIER STATEMENT OF CASH FLOWS, WHICH ARE SUMMARIZED AS FOLLOWS:

 

APPLIED. FOUR STAR

NET CASH PROVIDED BY OPERATING ACTIVITIES   $30,000   $70,000
CASH PROVIDED BY(USED FOR) INVESTING ACTIVITIES        
PURCHASES OF PROPERTY, PLANT, AND EQUIPMENT $(20,000)   $(100,000)  
SALE OF PROPERTY, PLANT, AND EQUIPMENT 40,000 20,000 10,000 90,000
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES        
ISSUANCE OF COMMON SHARES   -   30,000
PAYING OFF LONG -TERM DEBT   (40,000)   -
NET INCREASE IN CASH   $10,000   $10,000
         
         

1. BASED ON THIER CASH FLOWS, WHICH COMPANY LOOKS BETTER? GIVE YOUR REASONS.

2. USE CASH-FLOW DATA TO EVALUATE AN INVESTMENT.

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