X Corporation and Z Corporation had identical Cash positions at the beginning and end of 2020. Each company also reported a Net Income of $150,000 for 2020. 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? X Corporation The Statement of Cash Flows For the period ended December 31, 2020 Cash Flows from Operating Activities: Net Income Add/deduct noncash effects in Operating Income: Add Depreciation Expense $150,000 Z Corporation The Statement of Cash Flows For the period ended December 31, 2020 Cash Flows from Operating Activities: Net Income Add/deduct noncash effects in Operating Income: $150,000 $20,000 Add Depreciation Expense $160,000 Deduct Gain on Sale of Equipment (185,200) Deduct Increase in Account Receivable (45,000) Add Decrease in Inventories 37,500 Add Increase in Account Payable 11,400 Deduct Decrease in Tax Payable (3,000) Net Cash Flow from Operating Activities (164,300) (14,300) Add Decrease in Account Receivable Deduct Increase in Inventories Deduct Decrease in Account Payable Deduct Decrease in Tax Payable Net Cash Flow from Operating Activities 43,700 (87,500) (8,100) (8,600) 99,500 249,500 Cash Flows from Investing Activities: Sale of Equipment 204,900 Cash Flows from Investing Activities: Purchase of Equipment (20,400) Cash Flows from Financing Activities: Cash Flows from Financing Activities: Issue of L-T Notes Payable 20,000 Repayment of L-T Notes Payable (18,500) Net Increase in Cash 210,600 Net Increase in Cash 210,600 Add Cash at 01.01.2020 66.000 Add Cash at 01.01.2020 66.000 Cash at 31.12.2020 276,600 Cash at 31.12.2020 276,600