The following (summary) statement of cash flows has been provided by Sigma Designs, which specializes in diversified graphic systems, document imaging, and multimedia markets.

Sigma Designs, Inc.
Statement of Cash Flows (abbreviated)
For the Years Ended January 31, 1995 and 1994 (Dollars in Thousands)
1995 1994 Cash flows from operating activities:
Net loss $(1,000) $(2,145)
Summary of adjustments to net loss activities 2,997 2,731 Net cash provided by (used for)
operating activities 1,997 586 Cash flows from investing activities:
Purchases of marketable securities (20,547) (23,288)
Sales of marketable securities 35,245 32,155 Equipment additions (625) (502)
Software development costs (capitalized) (300) (1,200)
Other asset transactions (273) 215 Net cash provided by (used for)
investing activities 13,500 7,380 Cash flows from financing activities:
Common stock sold 594 450 Repayment of long-term debt (47) (40)
Other financing transactions (252) (75)
Net cash provided by (used for)
financing activities 295 335 Decrease in Cash and Equivalents $15,792 $ 8,301 Required

a. Explain and discuss each item that resulted in a change in cash for Sigma Designs.

b. Based on this information, evaluate Sigma’s future prospects.

c. Did Sigma use the direct or indirect method? What evidence indicates which method Sigma used?

d. With reference to the data in this assignment, and in the preceding assignment (5-42),prepare a graph showing the trends in Sigma Designs’cash flow from operations.On the same graph,show Sigma’s net income (loss).Discuss these trends, along with your estimate of Sigma’s future prospects.

e. Write a short memo to Sigma Designs’controller regarding the effects of net losses on operating cash flows during the period 1992 through 1995. Evaluate the dramatic turnaround in Sigma’s cash balances.What factors caused this reversal (1992-95)?