Top managers of Relax Inns are reviewing company performance for 2017. The income statement reports a 20% increase in net income over 2016. 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 statement of cash flows, in summarized form, reports the following:
Net cash used for operating activities................................................................ $(80,000)
Net cash provided by investing activities.............................................................. 40,000
Net cash provided by financing activities.............................................................. 50,000
Increase in cash during 2017............................................................................... $ 10,000
Requirement
Write a memo giving Relax Inns' managers your assessment of 2017 operations and your outlook for the future. Focus on the information content of the cash-flow data?