Chapter 16, Problem 16.1DC

Decision Case 16-1
Theater by Design and Show Cinemas are asking you to recommend their stock to your clients. Because Theater by Design and Show Cinemas earn about the same net income and have similar financial positions, your decision depends on their statement of cash flows, summarized as follows.

Theater by Design			Show Cinemas
Net Cash Provided by Operating Activities		$30,000		$70,000
Cash Provided by (Used for) Investing Activities:
Purchase of Plant Assets	$ (20,000)		$(100,000)
Sale of Plant Assets	40.000	20,000	10,000	(90,000)
Cash Provided by (Used for) Financing Activities:
Issuance of Common Stock		0		30,000
Payment of Long-term Debt		(40,000)		0
Net Increase (Decrease) in Cash		$ 10,000		$10,000

Based on their cash flows, which company looks better? Give your reasons.