You are considering an investment in a new start up Internet company, VideosToGo com Inc A review of the companys financial statements reveals a negative retained earnings In addition, it appears as though the company has been running a negative cash flow from operating activities since the company...

Startup companies are unique in that they frequently will have negative retained earnings and operat ...

You are considering an investment in a new start-up Internet company, VideosToGo.com Inc. A review of the

Question:

You are considering an investment in a new start-up Internet company, VideosToGo.com Inc. A review of the company’s reveals a negative retained earnings. In addition, it appears as though the company has been running a negative cash flow from operating activities since the company’s inception.
How is the company staying in business under these circumstances? Could this be a good investment?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...