Chapter 12, Problem 12.10ME

Interpreting Cash Flows from Operating, Investing, and Financing Activities

Quantum Dots, Inc., is a nanotechnology company that manufactures “quantum dots,” which are tiny pieces of silicon consisting of 100 or more molecules. Quantum dots can be used to illuminate very small objects, enabling scientists to see the blood vessels beneath a mouse’s skin ripple with each heartbeat, at the rate of 100 times per second. Evaluate this research-intensive company’s cash flows, assuming the following was reported in its statement of cash flows.

	Current Year	Previous Year
Cash Flows from Operating Activities
Net cash provided by (used for) operating activities	$ (50,790)	$ (46,730)
Cash Flows from Investing Activities
Purchases of research equipment	(250,770)	(430,145)
Proceeds from selling all short-term investments	35,000	______
Net cash provided by (used for) investing activities	(215,770)	(480,145)
Cash Flows from Financing Activities
Additional long-term debt borrowed	100,000	200,000
Proceeds from stock issuance	140,000	200,000
Cash dividends paid	—	(10,000)
Net cash provided by (used for) financing activities	240,000	390,000
Net increase (decrease) in cash	(26,560)	(136,875)
Cash at beginning of period	29,025	165,900
Cash at end of period	£ 2,465	$ 29,025