L.A. Gear, a manufacturer of sports shoes and sportswear, began operations in the early 1980s. By late 1996, however, the company was in bankruptcy.

Following are cash flow data for the company for the period 1995-1996.

Required
Explain how L.A. Gear generated cash to sustain its operations during the period prior to its bankruptcy filing.
What other financing options were available to the company?

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L.A. GEAR INC. Consolidated Statements of Cash Flow For Year Ended 12/31 ($ thousands) Operating activities Net loss.... Adjustments to reconcile net loss to net cash 1996 1995 $(61,689) $(51,397) provided by (used in) operating activities Depreciation and amortization... 4,555 7,266 Minority interest in net loss of joint venture. (6,986) (1,324) Loss on sale or abandonment of property and equipment 77 417 Increase in reserve for unused barter credits... 4,568 Write-off of goodwill.... 8,324 1,012 Unrealized foreign exchange gain (570) (Increase) decrease, net of effects of acquisitions, in Accounts receivable, net 20,581 30.603 Inventories 16,095 6,100 Prepaid expenses & other current assets. Other assets. 1,507 3,320 (12) 1,624 Increase (decrease), net of effects of acquisitions, in Accounts payable & accrued liabilities.... 16,166 (12.831) Net cash provided by (used in) operating activities. Investing activities 618 (11.212) Capital expenditures. (710) (3,256) Net cash used in investing activities (710) (3,256) Financing activities Costs related to issuance of Series B Shares. (661) Net (repayments) borrowings under international credit facilities (1,216) 622 Net cash (used in) provided by financing activities (1.877) 622 Effect of exchange rate changes on cash & cash equivalents... 252 92 Net (decrease) increase in cash & cash equivalents Cash & cash equivalents at beginning of year. Cash & cash equivalents at end of year. (1,717) 35,956 $ 34,239 (13,754) 49,710 $ 35,956