Question

Where did most of their cash inflow come from? Where did most of their Cash Outflow Go? Do You think these inflows and outflows indikcated good or bad news?

FINANCING ACTIVITIES:     Excess tax benefits from stock-based compensation $829

Proceeds from long-term debt and other $621

Repayments of long-term debt and other $(354)

Principal repayments of capital lease obligations $(3,860)

Principal repayments of finance lease obligations $(147)

Net cash provided by (used in) financing activities $(2,911)

Foreign currency effect on cash and cash equivalents $(212)

Net increase (decrease) in cash and cash equivalents $3,444

Answer 1

Most of the cash flows come from “operating activities” and “investing activities”, because of the following two reasons:

1) Net cash by financing activities is negative, $(2,911); it means cash is used more here by making high outflows. Therefore, the financing activity is not in part of cash inflows.

2) There is net increase in cash, $3,444; this figure is positive. It comes by the addition of operating activity, investing activity, and financing activity. Since financing activity has the negative figure, the other two activities must create such positive cash flow.

Most outflows go to financing activity, since it has negative net cash.

This would be good news, if the business can generate positive cash out of its core activity (operating activity). If the positive cash comes out of investing activity only then this is not good, since it indicates that the business is selling fixed assets.