Understanding the Statement of Cash Flows Sorter Company reported the following summarized cash flows for the current year:

a. Does Sorter Company appear to be in a favorable position to pay a cash dividend of $130,000 at year-end?

b. Why are operating cash flows critical in evaluating Sorter’s ability to pay future cash dividends?

c. If an investor wishes to determine if Sorter Company has generated cash by issuing additional stock, which portion of the cash flow statement would provide the information?

d. Is it possible for a company such as Sorter to report a positive cash flow for the period even though it has a negative cash flow from operations? Explain.

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Cash flows from operations Cash flows from investing activities Cash flows from financing activities Net cash flows Beginning cash balance Ending cash balance $ 600,000 (700,000) 200,000 $ 100,000 70,000 $170,000