case 2. APPLIED TECHNOLOGY INC. AND FOUR STAR CATERING LTD. ARE ASKING YOU TO RECOMMEND THEIR SHARES TO YOUR CLIENTS. BECAUSE APPLIED AND FOUR -STAR EARN ABOUT THE SAME NET INCOME AND HAVE SIMILAR FINANCIAL POSITIONS, YOUR DECISION DEPENDS ON THIER STATEMENT OF CASH FLOWS, WHICH ARE SUMMARIZED AS FOLLOWS:

APPLIED. FOUR STAR

NET CASH PROVIDED BY OPERATING ACTIVITIES		$30,000		$70,000
CASH PROVIDED BY(USED FOR) INVESTING ACTIVITIES
PURCHASES OF PROPERTY, PLANT, AND EQUIPMENT	$(20,000)		$(100,000)
SALE OF PROPERTY, PLANT, AND EQUIPMENT	40,000	20,000	10,000	90,000
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
ISSUANCE OF COMMON SHARES		-		30,000
PAYING OFF LONG -TERM DEBT		(40,000)		-
NET INCREASE IN CASH		$10,000		$10,000

1. BASED ON THIER CASH FLOWS, WHICH COMPANY LOOKS BETTER? GIVE YOUR REASONS.

2. USE CASH-FLOW DATA TO EVALUATE AN INVESTMENT.