Attempts: 35 Keep the Highest: 5/6 4. Cash flows Aa Aa \"Cash Is King\" for all

Question

Attempts: 35 Keep the Highest: 5/6 4. Cash flows Aa Aa "Cash Is King" for all businesses 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.

Explanation / Answer

First question: No

if a firm generates 100 million in revenue, it need not neccessarily be 100 million in cash, because there can be credit sales, which are not collected, non cash gains and expenses in the income statement which affect cash flows.

Second question:

Third question:

Net change in cash flow in year 2= closing cash balance in year 2- closing cash balance in year 1= 355-180= 175

The net change in cash flow is attributable to cash flow from operating+investing+financing activities

hence cash flow from operating + investing +financing activities= 175

1053-576+cash flow from financing activities= 175

cash flow from financing activities= -302

second option is correct

Repurchase of common stock Financing activity Decrease in rawmaterial Operating activity Purchase of new machinery Investing activity Holiday bonus Operating activity

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