Question: EXERCISE 71 Analysts often exploit the relation between a companys life cycle (see Exhibit 2.3) and its cash flows to better understand company performance and

EXERCISE 7–1 Analysts often exploit the relation between a company’s life cycle (see Exhibit 2.3) and its cash flows to better understand company performance and financial condition.

Required:

a. Explain how a company’s transition from the growth stage to “cash cow” is reflected in the statement of cash flows.

b. Describe how the decline of a “cash cow” is reflected in the statement of cash flows.

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