The following are the cash flows for each of the independent cases. Case 1 Case 2 Case 3 Cash provided by (used for) operating activities $ 3,000 $ (120,000 ) $ 80,000 Cash provided by (used for) investing activities (70,000 ) 10,000 (40,000 ) Cash provided by (used for) financing activities 75,000 75,000 (30,000 ) Net change in cash 8,000 (35,000 ) 10,000 Cash position at beginning of year 2,000 40,000 30,000 Cash position at end of year $ 10,000 $ 5,000 $ 40,000 Classify each of the following cases as a growing start-up company (S), a healthy established company (E), or an established company facing financial difficulties (F).

Question

contestada

Respuesta :

andromache andromache · Answer 1 · 2020-06-27T03:59:43+02:00

Answer and Explanation:

The classification is as follows

For case 1

It is a growing start-up company (S) with the following reasons

a. The cash flow from operating activities is very less as compared to the financing and investing activities

b. It is a start company so in this case the financing and investing activities are more

c. Moreover, the beginning cash balance is also less

For case 2

It is an established company facing financial difficulties (F) with the following reasons

a. The operating activity is in a negative amount

b. It is an established company so it facing a lot of difficulties

c. Net cash flow is also in negative

For case 3

It is a healthy established company (E) with the following reasons

a. The operating activity is in a positive amount

b. Since it is a healthy established company so it shows the positive net cash flow and strong cash position