The following information is available for two different retailers, both of whom began business this year:
|
Cash flows from: (in 000’s) |
New Co. A |
New Co. B |
|
Operating Activities |
$ (50,000) |
$ 40,000 |
|
Investing Activities |
20,000 |
(90,000) |
|
Financing Activities |
40,000 |
60,000 |
|
Net increase in cash |
$10,000 |
$10,000 |
|
Cash balance, Jan. 1 |
0 |
0 |
|
Cash balance, Dec. 31 |
$ 10,000 |
$ 10,000 |
Which company appears to be purchasing long term assets? Explain your response.
2. Which company would you expect to have future financial troubles? Why?
3. Which company would you expect to have the greater depreciation expense? Why?