You have been assigned to a team responsible for evaluating the company results based on thestatement of cash flows. One of your responsibilities is to determine how much cash should be kept onhand. On the statement of cash flows your team has identified the following issues:• Operating activities did not generate a positive cash flow• Cash was generated primarily from the sale of plant assets• Additional shares of stock were sold during the year• No loans were taken out during the year, and a substantial portion of debt was retired
Required:Answer the following questions relating to interpreting the statement of cash flows.a. Why is it important for a company to generate cash from operating activities on a consistent basis?b. What might a trend toward providing cash through investing activities suggest about a business?c. What factors might influence how much cash should be kept on hand?
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