Question

You can determine a company's cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. 

A firm has $100 million in revenues. Does that mean it has generated a cash flow of $100 million? 

• No 

• Yes 

Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. 

Ruth Enterprises distributes a holiday bonus to all its employees 

Yum Co. uses cash to repurchase 10% of its common stock. 

A company buys some common stock in its supplier's firm with its extra cash. 

A company records a decrease in its total raw materials inventory from the previous year. 

During the last year, Galaxy Sun Corp. generated $1,170 million in cash flow from operating activities and had negative cash flow generated from investing activities (-$640 million). At the end of the first year, Galaxy Sun Corp had $200 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year What was the firm's cash flow (CF) due to financing activities in the second year?

• -$225.00 million 

• $337.50 million 

• -$450.00 milliorn 

• $562.50 million

Answer 1

1.
No

2.
Operating Activity

3.
Financing Activity

4.
Investing Activity

5.
Operating Activity

6.
=(280-200)-(1170-640)=-450 million