Below are summary cash flow statements for three roughly equal-sized companies.

Calculate each company’s cash balance at the end of the year.

Looking at companies A and B, which company would you prefer to own? Why?

Is Company C’s cash flow statement cause for any concern on the part of C’s management or shareholders? Why or why not?

                             ($ millions)

                                                                                 A                          B                        C

Net cash flows from operating activities                       (300)                    (300)                    300

Net cash used in investing activities                             (900)                    (30)                    (90)

Net cash from financing activities                                1,200                    210                     (240)

Cash balance at beginning of year                                 150                    150                        150