7. Cash flows "Cash is king" for all businesses You can determine a company's cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. If a firm has a lot of net cash flow, does that mean the firm's balance sheet cash account must be high? Yes No Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Fitzi Chemical Co. earns revenue from its cash receipts from royalties. DigiInk Printing Co. buys new machinery to ramp up its production capacity. The Yum chain of restaurants conducts an initial public offering to raise funds for expansion. A company records a loss of $70,000 on the sale of its outdated inventory. Operating Activity Investing Activity Financing Activity Bus-Stone Associates Co. reported net sales of $700 million last year and generated a net income of $154 million. Last year's accounts receivable increased by $11 million. What is the actual amount of cash that Bus-Stone Associates Co. received from sales last year? $345 million $517 million $689 million $165 million