Top managers of Harmony Inns are reviewing company performance for 2012. The income statement reports a 20% increase in net income over 2011. However, most of the increase resulted from a gain on insurance proceeds from fire damage to a building. The balance sheet shows a large increase in receivables. The cash flows statement, in summarized form, reports the following:
Net cash used for operating activities ...................... $(71,500)
Net cash provided by investing activities ................. 43,000
Net cash provided by financing activities ................ 36,000
Increase in cash during 2012 ................................... $ 7,500

Write a memo giving Harmony Inns’ managers your assessment of 2012 operations and your outlook for the future. Focus on the information content of the cash flows data.