Think of a company with which you are familiar. Describe an investing activity related to a...

Think of a company with which you are familiar. Describe an investing activity related to a company’s sustainability efforts that would be classified as a use of cash on a company’s statement of cash flows. ? Describe a financing activity related to a company’s sustainability efforts that would be classified as a use of cash on a company’s statement of cash flows.

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Expert Solution

Hey there !

In the given question it is been asked to describe an investment activity which is aimed towards sutainability efforts and also a financing activity aimed towards the same.

The term Sustainable in this context, refers to recurring cash. Usually this form of cash flow is derived from profitable operations of the company.

Now, Investing activities include cash activities related to non current assets. Noncurrent assets include long-term investments, property, plant, and equipment etc.

Any amount paid on Purchase of Plant & Equipments by let's say a manufacturing concern will amount use of cash in an investment activity related to company's sustainability efforts. As purchase of P&M is in line with the company's efforts to stay in the industry and compete with other entities in the same industry and sustain.

Now, Financing activities include cash activities related to non current liabilities and owners’ equity. Non current liabilities and owners’ equity items include the principal amount of long-term debt, dividend payments etc.

Principal repayment of a long term loan taken for the purpose of Acquisition of plant or equip etc will be considered as a financing activity cash outflow related to sustainability efforts to keep the business running and at par with the competitors by keeping in line with the Innovation in the industry.

I hope you are clear with the solution...do let me know if you have any other concerns...happy to hel you... All the best !! :)

ekkarill92 answered 1 year ago

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