Chapter 3, Problem 3.1CTF

Summary Introduction

To discuss: The example of source of cash

Introduction:

The resource that is readily obtainable for utilization is cash, and cash equivalents include all the resources. The net amount of cash and its equivalent that moves in and out of a business is called cash flow. The cash flow of a company can be positive or negative and it is based on the increasing and decreasing nature of the asset.

Explanation of Solution

An example of the source of cash:

The activity that brings in cash or cash equivalents is called as the source of cash. The firm gets cash through the investment by owners, borrowings, converting other resources to cash, and management operations. The example for sources of cash is as follows:

Sources of cash in working capital:

• Increase in accounts payable

Conclusion

The sources of cash provide a summary of where the capital is from in corporate finance. The source of cash is helpful in situations like restructuring, mergers and acquisition, and recapitalization.