Or that the Company may have decided to transact business on cash basis or pay its debt to its suppliers as evidenced on decrease of accounts payable, thus cash outflow incurs. As a result, instead of cash produced, operating activities used $114,000 of its $200,000 fund.
In analyzing the investing and financing activities, the Company decided to outlay $450,000 cash to purchase an equipment and provide cash dividends to shareholders amounting to $250,000, contributing to Cash' further decrease.
With the previous illustration, we can see that the Company may be incurring an income of $100,000 however; it also indicates a decreased of Cash from $200,000 to $21,000. A negative or decrease in Cash Flow may indicate trouble if not properly managed. A decrease in cash by $179,000 may mean its cash is not properly managed enough to fund its business operations. Thus, the Company needs to evaluate and learn to manage its cash to sustain...
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