“Cash Is King” for all businesses You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? It reflects revenues when earned. It reflects cash generated and used during the reporting period. A. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Activity Investing Activity Financing Activity A company records a loss of $70,000 on the sale of its outdated inventory. D and W Co. sells its last season’s inventory to a discount store. Yum Brands distributes dividends to its common stockholders for the first time. DigiInk Printing Co. buys new machinery to ramp up its production capacity. B. During the last year, Globo-Chem Co. generated $702.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-384.00 million). At the end of the first year, Globo-Chem Co. had $120 million in cash on its balance sheet, and the firm had $380 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year? $-29.00 million $43.50 million $-58.00 million $72.50 million
“Cash Is King” for all businesses You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? It reflects revenues when earned. It reflects cash generated and used during the reporting period. A. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Activity Investing Activity Financing Activity A company records a loss of $70,000 on the sale of its outdated inventory. D and W Co. sells its last season’s inventory to a discount store. Yum Brands distributes dividends to its common stockholders for the first time. DigiInk Printing Co. buys new machinery to ramp up its production capacity. B. During the last year, Globo-Chem Co. generated $702.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-384.00 million). At the end of the first year, Globo-Chem Co. had $120 million in cash on its balance sheet, and the firm had $380 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year? $-29.00 million $43.50 million $-58.00 million $72.50 million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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“Cash Is King” for all businesses
You can determine a company’s cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets.
Which of the following is true for the statement of cash flows?
It reflects revenues when earned.
It reflects cash generated and used during the reporting period.
A. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement.
|
|
Operating Activity
|
Investing Activity
|
Financing Activity
|
|
|---|---|---|---|---|
| A company records a loss of $70,000 on the sale of its outdated inventory. |
|
|
|
|
| D and W Co. sells its last season’s inventory to a discount store. |
|
|
|
|
| Yum Brands distributes dividends to its common stockholders for the first time. |
|
|
|
|
| DigiInk Printing Co. buys new machinery to ramp up its production capacity. |
|
|
|
B. During the last year, Globo-Chem Co. generated $702.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-384.00 million). At the end of the first year, Globo-Chem Co. had $120 million in cash on its balance sheet, and the firm had $380 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year?
$-29.00 million
$43.50 million
$-58.00 million
$72.50 million
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