NuSmart Technology Ltd launched its latest wireless communications product in 2016. The company spent much of 2015 developing and testing software so that its equipment could operate seamlessly in the public switched telephone network. Information from the company’s statement of cash flows for the year ended 31 December 2016 follows.

The most significant source of cash generation was borrowing in 2015 and share issues in 2016. Despite delays, management has expressed confidence that the company is now positioned with a considerable competitive advantage. 

Required

Use the information provided to answer each of the following:

(a) If you were a creditor of NuSmart Technology, what reaction might you have to the 2015 and 2016 statement of cash flows?

(b) If you were a shareholder of NuSmart Technology, what reaction might you have to the cash flows in 2016?

(c) If you were evaluating the company as either a creditor or a shareholder, what other information would you be interested in reviewing? 

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Cash received from customers Cash generated (used) by operating activities Cash generated (used) by investing activities Cash provided (used) by financing activities Net change in cash 2016 $(8 700 703) 183 160 8 489 104 $ (28439) 2015 $(11 265 540) (42 968) 11 226 587 (81 921) $