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Finance & Accounting
Pages 4 (1004 words)
DB 7 Question 1: Main source of cash, main use of cash, and implications on stakeholders RadioShack’s main source of cash and implication on stakeholders The main source of cash for the organization is operating activities that generated the highest cash inflow, $ 155 million, as compared to cash flow from investing activities that was - $ 80 million and cash flow from investing activities that was - $ 413.
The cash inflow is good news to creditors whose interest is in availability of cash from which the organization can fulfill its debts. The cash inflow from operating activities, especially net profit, is also good news to the company’s stockholders who are interested in the interest that they can earn from their shares because such rates depend of profitability (Porter and Norton, 2012). The management, as the organization’s custodian, also delights in the positive cash flow as an indicator of their effectiveness and efficiency. The positive cash flow does not identify negative effects on the stakeholders (Harrison, Horngren, 2008; Porter and Norton, 2010). RadioShack’s main use of cash and implication on stakeholders The company’s main cash application is in financing activities through purchase of treasury stocks. This means that the corporation repurchased its stock and this has significant impacts on the management and stockholders. It offers benefits to stockholders because of the interest earned in selling their shares to the company. ...
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