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Top Trades Co has been trading for a number of years and is currently going through a period of expansion.
An extract from the statement of cash flows for the year ended 31 December 20X7 for Top Trades Co is presented as follows:
$’000
Net cash from operating activities 995
Net cash used in investing activities (540)
Net cash used in financing activities (200)
Net increase in cash and cash equivalents 255
Cash and cash equivalents at the beginning of the period: 200
Cash and cash equivalents at the end of the period: 455
Which of the following statements is correct according to the extract of Top Trades Co’s statement of cash flows?
The company has good working capital management
Net cash generated from financing activities has been used to fund the additions to non-current assets
Net cash generated from operating activities has been used to fund the additions to non-current assets
Existing non-current assets have been sold to cover the cost of the additions to non-current assets
Please explain the answer and the reasons of the same
Hi,
I’m not here to just answer the question directly. You need to answer the questions first and then I can explain why you’re right/wrong. Doing it this way helps your understanding and exam performance.
Once you’ve answered the question then I’ll be happy to answer it for you.
Thanks
Chris
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