E 1 2-2 1 A (L earn i ng Obj ec tiv e 3: Ev al u a t e a s t a t e m en t o f cash fl o w s —i nd i

E12-21A (Learning Objective 3: Evaluate a statement of cash flows—indirect method) Consider three independent cases for the cash flows of Building Blocks Corp. For each case, identify from the statement of cash flows how Building Blocks Corp. generated the cash to acquire new plant assets. Rank the three cases from the most healthy financially to the least healthy.

 

 

 

Case A

Case B

Case C

 

Cash flows from operating activities:

 

 

 

 

Net income

$   25,000

$   25,000

$   25,000

 

Depreciation and amortization

11,000

11,000

11,000

 

Increase in current assets

(27,000)

(2,000)

(14,000)

 

Decrease in current liabilities

(12,000)

(5,000)

(1,000)

 

 

(3,000)

29,000

21,000

 

Cash flows from investing activities:

 

 

 

 

Acquisition of plant assets Sales of plant assets (102,000)

11,000 (102,000)

46,000 (102,000)

111,000

(91,000)

(56,000)

9,000

 

Cash flows from financing  activities:

 

 

 

 

Issuance of stock

119,000

76,000

18,000

 

Payment of debt

(27,000)

(47,000)

(28,000)

 

 

92,000

29,000

(10,000)

 

Net increase (decrease) in  cash

$     (2,000)

$        2,000

$   20,000

 

 

"Is this question part of your assignment? We can help"

ORDER NOW