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. A firm has $100 million in revenues. Does that mean it has generated a cash flow of $100 million? O Yes O No 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.
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. A firm has $100 million in revenues. Does that mean it has generated a cash flow of $100 million? O Yes O No 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.
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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Transcribed Image Text: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.
A firm has $100 million in revenues. Does that mean it has generated a cash flow of $100 million?
Yes
O NO
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.
D and W Co. sells its last season's inventory to a discount store.
A company reports a 10% increase in its accounts payable from the last
month.
Yum Co. uses cash to repurchase 10% of its common stock.
A company buys some common stock in its supplier's firm with its extra cash.
Operating
Activity
O
O $300.00 million
O
O
Investing
Activity
O
O
O
Financing
Activity
O
O
O
O
During the last year, Globo-Chem Co. generated $1,170.00 million in cash flow from operating activities and had negative cash flow generated from
investing activities (-640.00 million). At the end of the first year, Globo-Chem Co. had $200 million in cash on its balance sheet, and the firm had $330
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?
Transcribed Image Text:During the last year, Globo-Chem Co. generated $1,170.00 million in cash flow from operating activities and had negative cash flow generated from
investing activities (-640.00 million). At the end of the first year, Globo-Chem Co. had $200 million in cash on its balance sheet, and the firm had $330
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?
O $300.00 million
O $-200.00 million
O $-400.00 million
O $500.00 million
Expert Solution
Step 1
Given,
Opening balance of cash is $200 million
Closing balance is $330 million
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