The following are the comparative statements of cash flows for Yellow Spruce Incorporated.

Required

a. Discuss the company’s ability to meet its non-operating needs for cash over these three years, and comment on the continuing nature of the major items that have appeared over this time period.

b. Comment on the changes in Yellow Spruce’s accounts receivable, accounts payable, and inventory levels over these three years.

c. How did Yellow Spruce finance its repayment of long-term debt and its acquisition of property, plant, and equipment and investments in 2020?

d. Describe how the company’s mix of long-term financing has changed during this three-year period, in terms of the proportion of debt versus equity.

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YELLOW SPRUCE INCORPORATED Statements of Cash Flows (in millions) 2020 2019 2018 Operating activities $ 57 $ 86 $ 98 Net income Add back: Depreciation expense 82 75 65 Loss (gain) on sale of investments (11) Effect of changes in working capital items: (38) Accounts receivable 30 (39) Inventory (21) (17) (21) Prepaid expenses 13 Accounts payable 27 (12) 35 Net cash inflow from operations 113 175 118 YELLOW SPRUCE INCORPORATED Statements of Cash Flows (in millions) Investing activities Acquisition of property, plant, and equipment (154) (161) (152) Acquisition of investments (23) (51) (72) Proceeds from sale of property, plant, and equipment 16 11 27 Net cash outflow for investing activities (161) (201) (197) Financing activities Issuance of long-term debt 213 156 332 Repayment of long-term debt (131) (72) (93) Issuance of shares 12 Repurchase of shares (38) (84) Dividends paid (16) (14) (15) Net cash inflow from financing activities 78 32 140 Overall increase in cash 30 6. 61 Cash position at beginning of year 100 94 33 Cash position at end of year $130 $100 $ 94