You are evaluating two companies as possible investments. The two companies, which are similar in size, are commuter airlines that fly passengers up and down the West Coast. All other available information has been analyzed, and your investment decision depends on the statements of cash flows.

Requirement
1. Discuss the relative strengths and weaknesses of Smooth and Mountain. Conclude your discussion by recommending one of the companies€™ stocks as aninvestment.

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Mountain, Inc. Statements of Cash Flows Years Ended May 31, 2013 and 2012 2013 2012 Operating activities: Net income 201,000 S 147,000 Adjustments for non-cash items Total Net cash provided by operating activities 92,000 293,000 66,000 213,000 Investing activities: Purchase of property, plant, and equipment $(448,000) 87,000 S(630,000) 113,000 Sales of property, plant, and equipment Net cash used for investing activities (361,000) (517,000) Financing activities: Issuance of long-term notes payable Payment of short-term notes payabl Net cash provided by financing activities $ 244,000 (107,000) S 168,000 (16,000) Increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year 137,000 $ 69,000 135,000 $ 204,000 152,000 (152,000) 287,000 S 135,000