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a. Most managers stress the importance of understanding and predicting cash flows for business decisions. Creditors evaluate a company's ability to generate cash before deciding
a. Most managers stress the importance of understanding and predicting cash flows for business decisions. Creditors evaluate a company's ability to generate cash before deciding whether to lend money. Investors also assess cash inflows and outflows before buying and selling shares. Required: Based on the cash flow information of the three companies below: i. Analyse the abilities of each company in generating future cash flow (6 marks) ii. From your answer in (i) above, justify which company that has the capabilities in generating the most future cash flow. (4 marks) A Bhd RM'000 100,000 B Bhd RM'000 40,000 C Bhd RM'000 (30,000) 36,000 Cash from (used in) operating activities Cash from (used in) investing activities Proceeds from sales of property, plant and equipment Purchase of property, plant and equipment Cash from (used in) financing activities Proceeds from issuance of debt Repayment of debt Net increase (decrease) in cash (50,000) (20,000) 14,000 (30,000) 20,000 20,000 20,000
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