Task: Below are summary cash flow statements for three roughly equal-size companies.
($ millions)
A B C
Net cash flows from operations $ (300) (300) $300
Net cash used in investing activities (900) (30) (90)
Net cash from financing activities 1,200 210 (240)
Cash balance at beginning of year 150 150 150
Question 1: Calculate each company's cash balance at the end of the year.
Question 2: Explain what might cause company C's net cash from financing activities to be negative.
Question 3: Looking at companies A and B, which company would you prefer to own? Why?
Question 4: Is company C's cash flow statement cause for any concern on the part of C's management or shareholders? Why or why not?