Cash Flow
Read and complete case study 10-10, “Eat at My Restaurant” in your text. Address the following elements, which are also “required” elements at the end of the case study:
- Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability.
- Comment on the data reviewed for each firm.
- Do any of these firms appear to have a cash flow problem?
Your answers should be in an essay form with an introduction and conclusion; ensure you are addressing each element clearly and thoroughly, following these guidelines:
- Requirement (a) of the problem should be answered in general terms; you do not need to consider the 3 firms in the case. However, you do need to make a choice and rationalize that choice.
- When addressing requirement (b), you should make AT LEAST 4 observations on each firm, focusing on the cash flow ratios provided.
- All information should be considered when answering requirement (c). Even if you don’t think any one company is in “trouble,” you should still choose a company and support your choice.
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