Use the cash flow statement, to answer the following analysis questions:

1. What accounting events trigger changes in the retained earnings account?
2. Explains the differences between cash flows from operating, financing, and investing activities. It is based on the cash flow statement presented.
3. If a company increases its accounts payable compared to the previous year, what will be the effect on the cash account?
4. How do increases in fixed assets from one period to the next affect the cash account?
5. Mention at least three working capital accounts that represent sources of cash for the firm and the changes that the financial manager would have to make in those accounts to improve the cash account for the next closing period of the firm.
6. What does decrease in short-term notes mean on the financial statement of Davis Corporation, LLC and how does it affect the cash balance at the end of the period?
7. Using the statement of cash flows for Davis Corporation, LLC, discuss what may have caused the largest change in the company's cash flow position for 20x9 compared to the previous year.

Davis Corporation, LLC Statement of Cash Flows ($ million)

Year Ending December 31, 20x9

Operating ActivitiesNet income$42Plus depreciation30Less increase in accounts receivables(5)Less increase in inventories(33)Plus increase in accounts payable1Cash flows from operations$35Investment ActivitiesLess increase in gross fixed assets($39)Financing ActivitiesDecrease in short-term notes(2)Increase in long-term debt11Issued new common stock in par value and additional paid in capital4Less dividends paid to owners(10)Financing cash flows$3Decrease in cash($1)Beginning cash21Ending cash$20

mba 5050 3.1