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John Marshall is employed as a bonk loan officer for First State Bank. He is comparing two companies that have applied for loans, and he
John Marshall is employed as a bonk loan officer for First State Bank. He is comparing two companies that have applied for loans, and he wants your help in evaluating those companies. The two companies--Morris. Inc., and Walker Company-are approximately the same size and had approximately the same cash balance at the beginning of year 1. Because the total cash flows for the three-year period are virtually the same. John is inclined to evaluate the two companies as equal in terms of their desirability as loan candidates. Abbreviated information (in thousands of dollars) from Morris, Inc., and Walker Company is as follows. a. Do you agree with John's preliminary assessment that the two companies are approximately equal in of their as loan candidates? Why or why not? b. What might account for fact that Walker Company's cash flow from financing activities it zero at 3? c. Generally, what would you advise John with regard to using statements of cash flow is in evaluating loan candidates
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