You are considering an investment in a new start up company, Giraffe Inc , an Internet service provider A review of the companys financial statements reveals a negative retained earnings In addition, it appears as though the company has been running a negative cash flow from operating activities si...

Startup companies are unique in that they frequently will have negative retained earnings and operat ...

You are considering an investment in a new start-up company, Giraffe Inc., an Internet service provider. A

Question:

You are considering an investment in a new start-up company, Giraffe Inc., an Internet service provider. A review of the company’s reveals a negative retained earnings. In addition, it appears as though the company has been running a negative cash flow from operating activities since the company’s inception.
How is the company staying in business under these circumstances? Could this be a good investment?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...