Question 4: Interpreting the statement of cash flows

The following are the comparative statements of cash flows for Yellow Spruce Incorporated.

YELLOW SPRUCE INCORPORATED Statements of Cash Flows (in millions)
	2020	2019	2018
Operating activities
Net income	$57	$86	$98
Add back:
Depreciation expense	82	75	65
Loss (gain) on sale of investments	2	0	(11)
Effect of changes in working capital items:
Accounts receivable	(38)	30	(39)
Inventory	(21)	(17)	(21)
Prepaid expenses	4	13	(9)
Accounts payable	27	(12)	35
Net cash inflow from operations	113	175	118
Investing activities
Acquisition of property, plant, and equipment	(154)	(161)	(152)
Acquisition of investments	(23)	(51)	(72)
Proceeds from sale of property, plant, and equipment	16	11	27
Net cash outflow for investing activities	(161)	(201)	(197)
Financing activities
Issuance of long-term debt	213	156	332
Repayment of long-term debt	(131)	(72)	(93)
Issuance of shares	12	0	0
Repurchase of shares	0	(38)	(84)
Dividends paid	(16)	(14)	(15)
Net cash inflow from financing activities	78	32	140
Overall increase in cash	30	6	61
Cash position at beginning of year	100	94	33
Cash position at end of year	$130	$100	$94

Required

a.) Discuss the company's ability to meet its non-operating needs for cash over these three years, and comment on the continuing nature of the major items that have appeared over this time period.

b.) Comment on the changes in Yellow Spruce's accounts receivable, accounts payable, and inventory levels over these three years.

c.) How did Yellow Spruce finance its repayment of long-term debt and its acquisition of property, plant, and equipment and investments in 2020?