Yandie Izzo manages a dividend growth strategy for a large asset management firm. Izzo meets with her investment team to discuss potential investments in three companies: Company A, Company B, and Company C. Statements of cash flow for the three companies are presented in Exhibit 1. Exhibit 1 Statements of Cash Flow, Most Recent Fiscal Year End (Amounts in Millions of Dollars) Company A Company B Company C Cash Flow from Operating Activities Net Income 4,844 1,212 15,409 Adjustments Depreciation 500 288 3,746 Other non- cash expenses 1,000 Changes in working capital (Increase) Decrease accounts receivable (452) (150) (536) (Increase) Decrease inventories (200) (803) Increase (Decrease) accounts payable (210) 100 (3) Increase (Decrease) other current liabilities 540 14 350 Net cash from operating activities 6,222 1,264 18,163 Cash Flow from Investing Activities (Purchase) Sale of fixed assets 2,379 (1,000) (3,463) Net cash from investing activities 2,379 (1,000) (3,463) Cash Flow from Financing Activities Increase (Decrease) notes payable 25 3000 1,238 Increase (Decrease) long- term debt (1,500) (1,000) (1,379) Payment of common stock dividends (1,000) (237) (15,000) Net cash from financing activities (2,475) 1,763 (15,141) Net change in cash and cash equivalents 6,126 2,027 (441) Cash and equivalents at beginning of year 50 100 3,000 Cash and equivalents at end of year 6,176 2,127 2,559 Supplemental Cash Flow Disclosures Interest (353) (50) (552) Income taxes (1,605) (648) (3,787) Izzos team first discusses key characteristics of Company A. The company has a history of paying modest dividends relative to FCFE, has a stable capital structure, and is owned by a controlling investor. The team also considers the impact of Company As three non- cash transactions in the most recent year on its FCFE, including the following: Transaction 1: A $900 million loss on a sale of equipment