Question $2(4$ points$)$

Based on reading the news articles on Best Buy, its economic environment poses challenges. As a company, it could respond to those challenges in several ways. Consider the possible ways Best Buy could respond and indicate how those responses would show up on the Statement of Cash Flows. Consider only the matters indicated in each scenario. Each of these scenarios is hypothetical. Best Buy responds to the potential of higher tariffs by purchasing a larger amount of inventory than in prior periods. It obtains extended credit from its vendors and expands accounts payable, in direct proportion to the increase in inventory.

Best Buy responds to challenges by utilizing a bank line of credit, that is secured by accounts receivable. It offers extended $($longer$)$ payment terms to customers. While many customers take advantage of the longer payment terms, sales do not increase or decrease materially. Best Buy responds to challenges by using new debt to update its stores to be more attractive with new furnishings and equipment. Best Buy responds to challenges by selling furniture and fixtures related to closed stores and utilizes those funds for additional advertising and rebranding.

$1.$ Cash flow from Operations decreases, cash flow from Investing activities is not affected, cash flow from Financing activities is positive.

$2.$ Cash flows from Operations is not affected, cash flow from Investing activities is negative, cash flow from Financing activities is negative.

$3.$ Cash flows from operations are not affected, cash flow from Investing activities is negative, cash flow from Financing activities is positive.

$4.$ Cash flow from operations decrease, cash flow from Investing activities is positive, cash flow from financing activities is not effected.

$5.$ Cash flow from Operations, Investing, and Financing activities are not affected.