Purchase Solution

Which companies are likely to need additional cash inflows?

Not what you're looking for?

Ask Custom Question

Lee wants to know if he will have to keep putting cash into companies after he purchases them. Here are three companies Lee has identified as potential acquisitions along with the information from the most recent cash flow statements (see attached excel sheet). All of these companies have a very small current cash balance. Which company is least likely to need additional cash inflows from Lee in order to continue to operate over the next several years? Explain briefly why (one or two sentences).

Attachments
Purchase this Solution
Solution Summary

Students often have trouble understanding and interpreting the items in the cash flow statement. This problem offers practice in this important area.

Solution Preview

In order to operate without needing additional cash flows, you need to generate ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Introduction to Finance

This quiz test introductory finance topics.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

View More Free Quizzes
Related BrainMass Solutions

  • Ways to Optimize Cash Flows

    (This technique is popular among the oil companies, the result of which is easily seen today). The problem outlines ways to slow cash outflows and speed cash inflows.

  • Evaluate the elements of a typical income statement

    Need help with the following questions with references. Need at least two paragraphs per question. 1. Evaluate the elements of a typical income statement and explain which is most likely to present challenges and why. 2.

  • Can you think of any instances in which a company would not

    Can you think of any instances in which a company would not need cash? -- There are some companies that know they have a down time during the year, where incoming profits will diminish.

  • Using Profitability (PI) Index for Project screening

    Interpretive Question: What additional information would be needed to screen and rank We need to know the cash flows year wise to calculate IRR for the projects.

  • Capital budgeting proposals

    The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm's cost of capital is 10 percent.

  • Cash Inflows

    b) Ability to borrow additional cash if needed. c) Too much and/or obsolete inventory which tie the cash for indefinite duration. The most critical issues that arise when determining a firm's cash inflows are explained.

  • Phantasy, Inc. Account Receipt

    Moreover, these cash inflows will happen in the future which presents a financial management problem to Phantasy's management - the company needs cash to finance its operations today, but its cash inflows from revenues will happen in the future.

  • Income statement; financial performance; expected value

    X to receive a cash inflows of $8949.47 and above is 0+0+5+25=30 For Y to receive a cash inflows of $119,32.62 and above is 10+15=25 d.

  • Rapid corporate growth and financing

    But no business can survive in the long run without generating positive cash flow per share for its shareholders. To have a positive cash flow, the company's long-term cash inflows need to exceed its long-term cash outflows.

View More Related Solutions