George's Trains Cash Flow Statement For the Year Ending 12/31/2015 Cash at Beginning of Year 20,000 Operations Cash receipts from Customers 750,000 Other Operations Cash paid for Inventory purchases (250,000) General operating and administrative expenses (125,000) Wage expenses (125,000) Interest (20,000) Income taxes (35,000) Net Cash Flow from Operations 195,000  Investing Activities Cash receipts from Sale of property and equipment 25,000 Collection of principal on loans Sale of investment securities Cash paid for Purchase of property and equipment (75,000) Making loans to other entities Purchase of investment securities Net Cash Flow from Investing Activities (50,000) Financing Activities Cash receipts from Issuance of stock Borrowing 15,000 Cash paid for Repurchase of stock (treasury stock) Repayment of loans (45,000) Dividends (50,000) Net Cash Flow from Financing Activities (80,000) Net Increase in Cash 65,000 Cash at End of Year 85,000
Week 3 – Discussion 1 Read the journal arTcle, “ Businesses Seeking Working Capital-Survey .” Based on the informaTon presented in the arTcle, discuss the following: How should a business use working capital analysis? A working capital analysis is used to measure the short-term efciency and health oF a business (Jackson, 2016). The Formula For calcula±ng the working capital ra±o is current assets divided by current liabili±es (Jackson, 2016). IF the number is posi±ve it means the business has enough current assets to pay current liabili±es and the business has a posi±ve cash ²ow. IF the number is nega±ve, it indicates a nega±ve cash ²ow and the company may have problems mee±ng its short term ³nancial obliga±ons (Jackson, 2016). Which is more important to the short-term lender: the stock of cash or the Fow of cash? Short-term lenders are more concerned with the ²ow oF cash than the stock oF cash. This is because “trade obliga±ons are sa±s³ed with cash not pro³t” (Credit Research ´ounda±on, 1999).