Background information: Anne Schippel, business banker, is analyzing Dry Supply’
ID: 2610995 • Letter: B
Question
Background information:
Anne Schippel, business banker, is analyzing Dry Supply’s financial statements and has complied a statement of cash flows for 20xz. The investing activities section is shown below.
DRY SUPPLY STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 12/31/20XZ ($ IN 000S)
CASH FLOW FROM INVESTING ACTIVITES
Cash flow from investing activities
Proceeds from sale of equipment $0
Payment received on note for sale of plant 0
Cash value life insurance decreases (increases) (2)
Capital expenditures (17)
Net cash provided by investing activities ($19)
What are some questions Anne Schippel should ask Dry Supply to better understand the investing cash flows of the business?
DRY SUPPLY STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 12/31/20XZ ($ IN 000S)
CASH FLOW FROM INVESTING ACTIVITES
Cash flow from investing activities
Proceeds from sale of equipment $0
Payment received on note for sale of plant 0
Cash value life insurance decreases (increases) (2)
Capital expenditures (17)
Net cash provided by investing activities ($19)
Explanation / Answer
If the equipment and plant is sold for no money without any other purchases does that mean reduction in operations ? Does Life insurance reflected relate to investment in employees ? If yes, does that mean increase in employees ? If capital expenditure is $17000, is it something recurring in nature ? If no what line item this reflects ?
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