Cash Is King for all businesses

You can determine a companys 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.

A firm has $100 million in revenues. Does that mean it has generated a cash flow of $100 million?

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.

	Operating Activity	Investing Activity	Financing Activity
A company records a loss of $70,000 on the sale of its outdated inventory.
Yum Brands distributes dividends to its common stockholders for the first time.
D and W Co. sells its last seasons inventory to a discount store.
DigiInk Printing Co. buys new machinery to ramp up its production capacity.

During the last year, Globo-Chem Co. generated $1,053.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-576.00 million). At the end of the first year, Globo-Chem Co. had $180 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firms cash flow (CF) due to financing activities in the second year?

$282.75 million

$-377.00 million

$471.25 million

$-188.50 million