A group of potential investors in A&E Software are reviewing the firm's statement of cash flows. The investors are specifically focusing on the firm's cash flows from operating activities. What can the investors determine by reviewing this section of the cash flow statement?

1. The investors can determine whether A&Erepays debts and pays dividends with cash on a regular basis.
2. The investors can determine whether A&Egenerates net cash inflows from selling its software products.
3. The investors can determine whether A&Euses available cash to replace existing facilities and equipment.
4. The investors can determine whether A&Eraises most of its available cash by borrowing from creditors.