Case 2. SPAR Corp. and Babcock. Inc., are asking you to recommend their stock to your clients.
Question:
Case 2. SPAR Corp. and Babcock. Inc., are asking you to recommend their stock to your clients. SPAR and Babcock earn about the same net income and have similar financial positions, so your decision depends on their cash flows, summarized as follows: SPAR Corp. Net cash inflows from operating activities $90.000 Babcock, Inc. $10,000 Net cash inflows (outflows) from investing activities: Purchase of plant assets. $ 100,000) $(20,000) Sale of plant assets. Net cash inflows toutflows) from financing activities: Issuance of common stock. Paying off long-term debt Net increase in cash.. 10,000 (90.000) 80,000 60.000 30,000 $30.000 (40,000) $30,000 Based on their cash flows, which company looks better? Give your reasons.
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones