4. Stockholders' equity The statement of retained earnings or the statement of stockholders" equity reconciles the net income, dividends paid, and the change in retained earnings during a particular year. Which of the following best describes shareholders" equity? () Equity is the difference between the company's assets and liabilities. () Equity is the initial claim on value of the assets before the firm pays off its liabilities. NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today's paper. In its annual report this year, NOW Inc. reported a net income of $156 million. Last year, the company reported a retained earnings balance of $527 million, whereas this year it increased to $620 million. How much was paid out in dividends this year? (0 %249 million O $4 million O 320 million O %63 million "Cash Is King" for all businesses You can determine a company's cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. Which of the following is true for the statement of cash flows? () It reflects cash generated and used during the reporting period. ) It reflects revenues when earned. Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement. Operating Investing Financing Activity Activity Activity Yum Brands distributes dividends to its common stockholders for the first ) O O O time. A company records a loss of $70,000 on the sale of its outdated inventory. O 9] O DigiInk Printing Co. buys new machinery to ramp up its production capacity. O 9] O D and W Co. sells its last season's inventory to a discount store. O O O During the last year, Globo-Chem Co. generated $702 million in cash flow from operating activities and had negative cash flow generated from investing activities (-$284 million). At the end of the first year, Globo-Chem Co. had $120 million in cash on its balance sheet, and the firm had $380 million in cash at the end of the second year. What was the firm's cash flow (CF) due to financing activities in the second year? O -$58.00 million (O -4$29.00 million O $72.50 million O 43.50 million