The following are summary cash flow statements for three roughly equal-sized companies:   ($ millions) A B C Net cash flows from operating activities $(300) $(300) $300 Net cash used in investing activities (900) (30) (90) Net cash from financing activities 1,200 210 (240) Cash balance at beginning of year 150 150 150 a

a)Cash Flow Statement:

b) Company C has a negative cash flow through financing. There can be two possibilities attached to it. One is that C might have retired any long-term debt or the other is that C might have paid dividend to its shareholders.

c) While comparing firm A and B, here net cash of Firm A is more than Firm B, also the net cash in investing activities of A is more than B, which means that investment done by A is more and can bring more returns in near future. Also the net cash through financing activities is more in firm A that may be due to possibility of debt financing which can give the tax shield benefits to firm A. Therefore, A should be preferred to own.

d) While looking into the cash flow of Company C, it is visible that the firm last year generated a net cash of $150 in millions and now it is reduced to $120 in millions. Also firm C has blocked its cash in many other activities which or non cash generating activities and in future can cause liquidity issues. So as a management point of view there should be an optimal management between all the activities to get good returns as well as have adequate working capital.