Analyze a statement of cash flows. (LO 5, 6, 7)

Use the statement of cash flows for the SS\&P Company to answer the required questions

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a. How did SS\&P Company use the majority of its cash during 2007?

b. What information does this give you about SS\&P Company?

c. How did SS\&P Company obtain the majority of its cash during 2007 ?

d. Is this an appropriate source of cash in for the long run? Explain.

e. Calculate SS\&P's free cash flow for 2007.

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(in thousands) SS&P Company Statement of Cash Flows For the Year Ended December 31, 2007 Cash from operating activities: Net income Depreciation expense Decrease in accounts receivable Increase in inventory Increase in prepaid rent Decrease in accounts payable Net cash provided by operating activities Cash from investing activities: Purchase of equipment Proceeds from sale of old equipment Net cash used by investing activities Cash from financing activities: Repayment of long-term mortgage Proceeds from sale of common stock Payment of cash dividends Net cash used by financing activities Net increase in cash during 2007 Cash balance, January 1, 2007 Cash balance, December 31, 2007 $ 2,500 $ 510 720 (90) (20) (150) 970 $ 3,470 $(3,000) 900 (2,100) $(7,500) 2,100 (1,200) (6,600) $ (5,230) 10,580 $ 5,350