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Two companies (Company A and Company B) approached you for a loan. Both companies are similar in most aspects except for the composition of cash

Two companies (Company A and Company B) approached you for a loan.

Both companies are similar in most aspects except for the composition of cash flows (see below).

Company A

Company B

Net cash flows from:

2019 ($) 2018 ($)

2019 ($) 2018 ($)

Operating activities

150,000 70,000

(50,000) 30,000

Investing activities

(80,000) (40,000)

120,000 -

Financing activities

30,000 10,000

30,000 10,000

Net cash flows

100,000 40,000

100,000 40,000

Examine the above information to explain whether you should lend to Company A or Company B.

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