Your employer is looking to diversify into the baked goods industry. It is considering an investment in
Question:
Your employer is looking to diversify into the baked goods industry. It is considering an investment in either Sweet Treats Ltd. or Cupcakes Inc. Both companies earn about the same net income and have similar financial positions, so your decision depends on their cash flow statements, summarized as follows:
Based on their cash flows, which company looks better? Give your reasons.
Transcribed Image Text:
Sweet Treats Ltd. Cupcakes Inc. Net cash inflows from operating activities $ 90,000 $ 50,000 Net cash inflows (outflows) from investing activities $(100,000) $ (20,000) Purchase of property, plant, and equipment Sale of property, plant, and equipment 10,000 (90,000) 40,000 20,000 Net cash inflows (outflows) from financing activities Issuance of common shares 30,000 Issuance of long-term debt 80,000 Repayment of long-term debt 30,000 (120,000) (40,000) Net increase in cash $ 30,000 $ 30,000
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ANSWER To determine which company is a better investment we need to analyze their cash flow statemen...View the full answer
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Horngrens Accounting
ISBN: 9780135359785
11th Canadian Edition Volume 2
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood
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