Waguespack Corporation and Hedrick Corporation had identical cash positions at the beginning and end of 20X9. Each company also reported a net income of $150,000 for 20X9. Evaluate their cash flow statements that follow. Which company is displaying elements of cash flow stress? What factors cause you to reach this conclusion? What is the importance of evaluating a company's cash flow statement?
	WAGUESPACK CORPORATION
	Statement of Cash Flows
	For the year ending December 31, 20X9
		Cash flows from operating activities:
		Net income		$ 150,000
		Add (deduct) noncash effects on operating income
		Depreciation expense	$ 20,000
		Gain on sale of equipment	(185,200)
		Increase in accounts receivable	(45,000)
		Decrease in inventory	37,500
		Increase in accounts payable	11,400
		Decrease in income taxes payable	(3,000)	(164,300)
		Net cash provided by operating activities		$ (14,300)
		Cash flows from investing activities:
		Sale of equipment		204,900
		Cash flows from financing activities:
		Proceeds from long-term borrowing		20,000
		Net increase in cash		$ 210,600
		Cash balance at January 1, 20X9		66,000
		Cash balance at December 31, 20X9		$ 276,600
	HEDRICK CORPORATION
	Statement of Cash Flows
	For the year ending December 31, 20X9
		Cash flows from operating activities:
		Net income		$ 150,000
		Add (deduct) noncash effects on operating income
		Depreciation expense	$ 160,000
		Decrease in accounts receivable	43,700
		Increase in inventory	(87,500)
		Decrease in accounts payable	(8,100)
		Decrease in income taxes payable	(8,600)	99,500
		Net cash provided by operating activities		$ 249,500
		Cash flows from investing activities:
		Purchase of equipment		(20,400)
		Cash flows from financing activities:
		Repayment of long-term borrowing		(18,500)
		Net increase in cash		$ 210,600
		Cash balance at January 1, 20X9		66,000
		Cash balance at December 31, 20X9		$ 276,600