Question
MyVeryOwnBiz Inc. has been your business for the past several years. You have put together your cash flow statements for the past 3 years to
MyVeryOwnBiz 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 31 | 2021 | 2020 | 2019 |
Cash flow from operations | 5,000 | 20,000 | 40,000 |
Cash flow from investing | 25,000 | 10,000 | -5,000 |
Cash flow from financing | 35,000 | -5,000 | -25,000 |
Net change in cash | 65,000 | 25,000 | 10,000 |
Cash, beginning of year | 167,000 | 142,000 | 132,000 |
Cash, end of year | 232,000 | 167,000 | 142,000 |
Profit for the year | 1,000 | 15,000 | 35,000 |
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. operating, because it is the only sustainable source of cash
D. Investing, because it shows how much the company has spent on long-lived assets
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. lower depreciation expense
C. receiving contributions from owners
D. disposing of long-lived assets
E. lower dividends
Cash flow from financing activities has gone from negative to positive over the years. Which of the following transactions can cause financing cash flow to increase?
A. purchase of long-lived assets
B. a lower income tax rate
C. disposal of long-lived assets
D. decreased depreciation expense
E. borrowing from the bank
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