Belvenie Company has competed for many years in product lines that have recently experienced a great increase in global competition. These products have long been dominated by U.S. firms. The company has no foreign operations and few personnel with experience in international trade. The company has made a few product changes in recent years and is not actively engaged in product innovation or research and development.

The following information is selected from the companys financial statements and notes for the period 2012 to 2014 ($000):

a	2012	2013	2014
Net income	$60,000	$40,000	$3,500
Net accounts receivable (ending)	30,000	12,000	5,000
Inventory (ending)	19,000	14,000	8,000
Net cash inflow from operations	15,000	7,000	1,500
Capital expenditures	9,000	7,000	4,000
Proceeds from sale of plant assets	15,000	10,000	35,000
Net gain on sales of plant assets	16,000	12,000	25,000

The company also did the following:

1. Recently negotiated with banks to extend payment terms on short-term loans.

2. Maintained very low levels of accounts payable during this period.

3. Held significant investments in corporate bonds (interest revenue on bonds in 2014 was $3,000).

4. Paid no dividends during this period.

5. Issued no stock or bonds during this period.

Belvenie Company
Statement of Cash Flows
For the Year ended December 31, 2014
Cash flows from operating activities:
Net income	$3,500
Items reconciling net income to net cash flows from operating activities:
Accounts receivable decrease	7,000
Inventory decrease	6,000
Extraordinary loss, building fire	12,000
Dividends received (equity investment)	8,000
Investment revenue (equity investment)	(14,000)
Gains on sales of plant assets	(25,000)
Depreciation, amortization	4,000
Net cash inflow from operating activities		$1,500
Cash flow from investing activities:
Purchase of plan assets	($4,000)
Insurance proceeds on building fire	20,000
Sale of plant assets	35,000
Purchase of corporate bonds	(5,000)
Purchase of corporate stocks	(10,000)
Net cash inflow from investing activities		36,000
Cash flows from financing activities:
Principal payments on short-term notes to financial institutions	($15,000)
Purchase of treasury stock	(6,000)
Net cash outflow from financing activities		(21,000)
Net cash increase		$16,500
Beginning cash balance		12,000
Ending cash balance		$28,500

Required:

Provide an interpretation of the companys statement of cash flows in light of its situation. Consider ethical matters in the context of company strategy and financial disclosure.