Reference no: EM132611949

Below is given cash flow statements of 3 companies A, B and C.

                                                          A                               B                                  C

Operating Activities                   $(2,000,000)       $ 2,700,000             $(3,000,000)

Investing Activities                     (6,000,000)          (600,000)                (400,000)

Financing Activities                        9,000,000             (400,000)             (2,600,000)

Net Increase (Decrease)                $ 1,000,000             $ 170,000             $(6,000,000)

Question a) Comment on the difference between net cash provided by operating, investing, financing activities and net increase (decrease). What could be the reasons behind the figures?

Question b) Speculate on which number is likely to be the better indicator of long-term profitability.

Question c) is any of these firms appear to have a cash flow problem? Comment.

Question d) By looking at the figures categorize the three firms into growth firm, the firm in danger of bankruptcy, and the firm that is the older firm expanding slowly. Explain your selection

Question e) What are the different malpractices which company use to manipulate their cash flow statements