Explain the cash flow cycle in Figure 7.1. Give particular attention to categorizing each cash flow shown as operating, investing, or financing. Why are these distinctions important to a new venture?

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Debri Includes initial borrowing and mascotcom (185). Fixed assets Fixed (BS) affect 15 expase Cash sales Reese frome) (S) Beginning cash Raw materials lily way() becomes pan of cost of goods sold (S) Phases on credia cete payable Finished goods Fed good aventury (85) flows to cost of goods sold (B) Pse include a mangin to cover&G A and turns so debt and equity Cash from operations Excludes cash sales sales when collected (HS) Interest payment Cath) fix() Taxes Equity Includes initial equity, retained emings and be quanti (0) Labor and other Included or expe seling meal and admis expense (SG&A) e (8). Unpaid wages appear gpayable() Credit sales Revenue fredi 5) accounts servable (KS), covers to cash when colle Ending cash from operation Reinvested cash Principal repayment Can (BS) to repay (5) Dividends Cash (BS) to wides to equity (45) Share repurchase Cash ()d to qui