The following are the cash flows for each of the independent cases. Case 1 Case 2 Case 3 Cash provided by (used for) operating activities$3,000 $(120,000) $80,000 Cash provided by (used for) investing activities (70,000) 10,000 (40,000) Cash provided by (used for) financing activities 75,000 75,000 (30,000) Net change in cash 8,000 (35,000) 10,000 Cash position at beginning of year 2,000 40,000 30,000 Cash position at end of year$10,000 $5,000 $40,000 Classify each of the following cases as a growing start-up company (S), a healthy established company (E), or an established company facing financial difficulties (F).

Cash Flow Statement: Cash Flow Statement is a fundamental financial statement that renders valuable information regarding the cash inflows or the cash receipts of a business and the cash outflows or cash payments for a specific period of time. The cash flow statement also provides information regarding the net cash change that occurred during a period, classifying the activities into three categories those are cash from operating activities, investing, and financing activities.Case 1 = (S) The start-up companies have little operating cash flows. They invest more in log-term assets and rely most on financing activities for cash inflows. Case 2 = (F) The well-established company facing difficulties have negative operating cash flows. They stop spending cash on investing activities and instead use cash for financing activity to repay its lenders. Case 3 = (E) The healthy established companies have positive cash flows from operating activities. They prefer to spend their cash in acquiring long-term assets and to repay their long-term liabilities.

Answered: The following are the cash flows for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following are the cash flows for each of the independent cases.

	Case 1		Case 2	Case 3
Cash provided by (used for) operating activities	$	3,000		$	(120,000	)	$	80,000
Cash provided by (used for) investing activities		(70,000	)		10,000			(40,000	)
Cash provided by (used for) financing activities		75,000			75,000			(30,000	)
Net change in cash		8,000			(35,000	)		10,000
Cash position at beginning of year		2,000			40,000			30,000
Cash position at end of year	$	10,000		$	5,000		$	40,000

Classify each of the following cases as a growing start-up company (S), a healthy established company (E), or an established company facing financial difficulties (F).

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