1.True or False.A profitable business can go bankrupt by running out of cash.Why or why not?

2.The Cash Flow statement shows cash received or paid out based on three different types of activities (for example, cash from operating activities).List and explain these three activities and provide two examples for each.

3.Compute the operating cash flow cycle based on the following information. (Show your calculations.)

The owner of OTFL Party Supplies computes her company's financial ratios and finds it has:

Days in Accounts Payable = 42 days

Days in Accounts Receivable = 30 days

Days in Inventory = 26 days

4.Compute the June 30, 2017 ending cash balance for Bengal Equipment Company, based on the following information.Show all computations in an Excel spreadsheet and submit this spreadsheet on Moodle along with this document.

Beginning cash balance, January 1, 2017 = $20,000

Sales

January$6,000

February$3,500

March$4,000

April$2,000

May$1,500

June$2,000

60 percent of the sales are in cash.The other 40 percent are accounts receivable collected in the next month.

Rent = $1,200 per month

Utilities = $500 per month

Wages =$2,000 per month

A tax prepayment of $3,000 will be paid in March.

A capital addition of $7,000 will be paid in April.

Interest income of $5,500 will be received in May.

The owner plans to invest another $10,000 in cash in June.