MyOwnBiz Inc. has been your business for the past several years. You have put together your cash flow statements for the past 3 years to get a better idea of how your business is managing cash flow.

Year ending December 31202120202019Cash flow from operations56,00050,00040,000Cash flow from investing25,0005,0005,000Cash flow from financing-30,000-20,00025,000Net change in cash51,00035,00070,000Cash, beginning of year237,000202,000132,000Cash, end of year288,000237,000202,000Profit for the year 59,000 52,000 45,000

ENTRY RULES:

Enter the letter that corresponds to your choice. (A B C D E)

Which section of the cash flow statement is considered the most important? Why?

A. All the sections are considered equally important.

B. financing, because it shows how much the company has borrowed

C. Investing, because it shows how much the company has spent on long-lived assets

D. operating, because it is the only sustainable source of cash

E. the change in cash, because it shows the year-over-year difference

Which life-cycle stage was the business most likely in, back in 2019?

A. start-up

B. growth

C. maturity

D. either growth or maturity

E. decline

Which life-cycle stage is the business most likely in by 2021?

A. start-up

B. growth

C. maturity

D. either growth or maturity

E. decline

Cash flow from investing activities has gone from negative to positive over the years. Which of the following transactions can cause investing cash flow to increase?

A. borrowing from the bank

B. disposing of long-lived assets

C. receiving contributions from owners

D. lower depreciation expense

E. lower dividends

Cash flow from financing activities has gone from positive to negative over the years. Which of the following transactions can cause financing cash flow to decrease?

A. purchase of long-lived assets

B. a higher income tax rate

C. disposal of long-lived assets

D. increased depreciation expense

E. paying down a bank loan