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.

If a firm has a lot of net cash flow, does that mean the firms balance sheet cash account must be high?

Options:

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A company records a loss of $70,000 on the sale of its outdated inventory.
DigiInk Printing Co. buys new machinery to ramp up its production capacity.
Ruth Enterprises distributes a holiday bonus to all its employees.
The Yum chain of restaurants conducts an initial public offering to raise funds for expansion.

Exeter Enterprise Inc. reported net sales of $250 million last year and generated a net income of $55.00 million. Last years accounts receivable increased by $35 million. What is the maximum amount of cash that Exeter Enterprise Inc. received from sales last year?

Options:

$215.00 million

$161.25 million

$107.50 million

$90.00 million