Question 17 (5 points)

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Question 17 options:

ThisIsMyCo 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	31,000	32,000	30,000
Cash flow from investing	-4,000	-3,000	-5,000
Cash flow from financing	-20,000	-18,000	-15,000
Net change in cash	7,000	11,000	10,000
Cash, beginning of year	66,000	55,000	45,000
Cash, end of year	73,000	66,000	55,000
Profit for the year	35,000	34,000	32,000

REQUIRED

The questions that follow relate to the cash flow statements above.

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

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

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

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

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 been fairly steady, and slightly negative, throughout this period. Which of the following transactions can cause investing cash flow to be negative?

A. borrowing from the bank

B. purchasing or replacing long-lived assets

C. receiving contributions from owners

D. lower depreciation expense

E. lower dividends

Cash flow from financing activities has been fairly steady, and slightly negative, throughout this period. Which of the following transactions can cause financing cash flow to be negative?

A. purchase of long-lived assets

B. increased depreciation expense

C. disposal of long-lived assets

D. paying down a bank loan

E. a higher income tax rate

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