Question

Both of the following companies are merchandisers that began operations this year. X Company Y Company Cash from operating activities $ 20,000 $ 60,000 Cash from investing activities (200,000) (100,000) Cash from financing activities 230,000 90,000 Net increase in cash $ 50,000 $ 50,000 Which of these two companies appears to have made the larger purchases of property, plant, and equipment during the year?

Answer 1

Answer:

Company X

Explanation:

It seems company X made more purchase for PPE

Investing activities refers to the purchase of long-term assets or investment

Considering Company X used 200,000 cash for investing activities

while Company Y used 100,000 cash for investment activities.

We can assume Company X made more purchase of PPE

However, company Y could made purchase without cash (issued of shares, or signing a note) Which will not use cash.