Use the following statement of cash flows for the SS&P Company to answer the required questions:

Requirements
1. How did SS&P Company use the majority of its cash during 2011?
2. What information does this give you about SS&P Company?
3. How did SS&P Company obtain the majority of its cash during 2011?
4. Is this an appropriate source of cash for the long run? Explain.
5. Calculate SS&€™s free cash flow for2011.

Transcribed Image Text:

SS&P Company Statement of Cash Flows For the Year Ended December 31, 2011 amounts in thousands) Cash from operating activities: Net income 2,500 Depreciation expense . Decrease in accounts receivable 510 Increase in inventory. Increase in prepaid rent (90) (20) L0) 3470 Decrease in accounts payable Net cash provided by operating activities Cash from investing activities: $(3,000) Purchase of equipment Proceeds from sale of old equipment Net cash used by investing activities (2,100) Cash from financing activities: Repayment of long-term mortgage$(7,500) Proceeds from sale of common stock Payment of cash dividends ..2,100 1 200) Net cash used by financing activities Net increase (decrease) in cash during 2011.. Cash balance, January 1, 2011 Cash balance, December 31, 2011 ....(6,230) 10,58