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 Western Air and Tech Flights. Conclude your discussion by recommending one of the companies' stocks as an investment.
Selected income statement data for current year:

Selected balance-sheet and market price data at the end of the current year:

Transcribed Image Text:

Western Air Statements of Cash Flows Years Ended May 31, 2017 and 2016 2017 2016 Operating activities: 5(105,000 214,000 Net income (net loss) Adjustments to reconcile net income(loss) to net cash provided by operating activities: Tota Net cash provided by operating activities (44,000 118,000 13,000 170,000 Investing activities: Purchase of property, plant, and equipment Sale of long-term investments Net cash provided by (used for) 94,000 98,000 (147,000) 29,000 investing activities 4,000 (118,000 Financing activities: Issuance of short-term notes payable 149,000 Payment of short-term notes payable(256,000) Payment of cash dividends Net cash used for financing activities 185,000 (134,000) (106,000 6100 1400 (55,000) (3,000) 171,000 168,000 Increase (decrease) in cash Cash balance at beginning of year 168,000 11,000 Cash balance at end of year Tech Flights Statements of Cash Flows Years Ended May 31, 2017 and 2016 2017 2016 Operating activities: $ 201,000 Net income Adjustments to reconcile net income to net cash provided by operating activities $ 147000 Total Net cash provided by operating activities 92,000 293,000 66,000 213,000 Investing activities: Purchase of property, plant, and equipment Sales of property,plant, and equipment et cash used for investing activities (448,000) 87,000 $(630,000) 113,000 361,000) (517,000 Financing activities: ssuance of long-term notes payable Payment of short-term notes payable Net cash provided by financing activities 244,000 (107,000 $ 168,000 (16,000 152,000 Increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year 137,000 69,000 135,000 S(152,000 287,000 Disc.com Holiday Shops $514,000 390,000 79,000 16,000 39,000 Net sales (all on credit$595,000 Cost of goods sold. Income from operations... Interest ex ..458,000 86,000 64,000 Disc.com Holiday Shops Current assets: Cash.26,000 $ 42,000 12,000 162,000 187,000 13,000 7,000 184,000 217,000 20,000 54,000 416, 982,000 Current receivables, net Prepaid expenses... Total current assets 932,000 lotal assets Total current liabilities Total liabilities. Preferred stock: 1096, $100 par Common stock, $1 par (100,000 shares .. 365,000 335,000 670,000 713,000 20,000 100,000 50,000 .. 312,000 219,000 . 6.40 66.60 S5 par (10,000 shares ). Total stockholders' equity M larket price per share of common stock