1.

Do you agree with the conclusion in the video suggesting that, "the
net decrease in cash and cash equivalents is not a concern"? Justify
your response.
I agree with the conclusion suggesting that, "the net decrease in cash and
cash equivalents is not a concern" as the cash flow statement does not tell us
the profit earned or lost during a particular period: profitability is composed of
cash earned but also of non-cash items. This is true even for items on the
cash flow statement such as "cash increase from sales minus expenses." This
item is not an indicator of profit. The cash flow statement does not tell the
whole profitability story, and it is not a reliable indicator of the overall financial
well-being of the company. While a company's cash situation is significant, it
is not reflective of the company's entire financial condition. The cash flow
statement does not account for liabilities and assets, which are recorded on
the balance sheet. Furthermore, accounts receivable and accounts payable, each of
which can be sizeable, are also not reflected in the cash flow statement. In
other words, the cash flow statement is a compressed version of the
company's checkbook that includes a few other items that affect cash. For
example, the financing section shows how much the company spent or
collected from the repurchase or sale of stock, the amount of issuance or
retirement of debt, and the amount the company paid out in dividends.
The cash flow statement is not straightforward. Those who pay attention to the
cash flow statement should understand the extent to which a company relies on
the capital markets and the extent to which it relies on the cash it has generated.
No matter how profitable a company may be, if it lacks the cash to pay bills, it is
likely to fail.

Investing in a company that shows positive cash flow is wise, but there are also
opportunities in companies that aren't yet cash-flow positive.

The cash flow statement is simply a piece of the puzzle. Analyzing the cash
flow statement together with the other statements gives a more accurate
representation of a company's financial health. Knowing what to look for on a
cash flow statement will help an investor avoid holding stock that suffers from
a cash flow crunch.

Reference:- https://www.investopedia.com/investing/read-corporate-cash-flow-statement/
 2. In your view, negative cash flow under which of the three activities would be the least
alarming? Support your argument with the help of illustrations of cash flow statement
published by your organization or any other organization that you are familiar with.

Negative cash flow under Cash flow from investing activities is one of the
three sections of a company's statement of cash flows that would be the least
alarming.
The cash flow statement is a financial statement that summarizes the amount
of cash and cash equivalents entering and leaving a company.

The cash flow statement (CFS) measures how well a company manages its cash
position, meaning how well the company generates cash to pay it's debt
obligations and fund it's operating expenses. The cash flow statement
complements the balance sheet and income statement.

The 3 main components of the cash flow statement are as follows:

1. Cash from operating activities

2. Cash from investing activities
3. Cash from financing activities

Investing activities include any outflows of cash or sources of cash from a

company's investments. A purchase or sale of an asset, cash out due to a
merger or acquisition, loans made or loan proceeds received are all included in
investing activities. In short, any changes in assets, investments, or equipment
will impact cash from investing activities.

However, when a company divests an asset, the transaction is considered a

credit or "cash in" and is listed in investing activities.

Although companies and investors usually want to see positive cash flow from all
of a company's operations, having negative cash flow from investing activities is
not always bad and needs further evaluation before decisions are made on a
company's investing activities.

It's entirely possible and not uncommon for a growing company to have a
negative cash flow from investing activities. For example, if a growing company
decides to invest in long-term fixed assets, it will appear as a decrease in cash
within that company's cash flow from investing activities.

Even well-established companies make investments in long-term assets such as

property and equipment from time to time might and might cause investing
activities to go negative.
This is the cash flow statement from Exxon Mobil (XOM) as of March 31, 2018:

 We can see that Net cash used in investing activities was -$1.859 billion.
 The two primary drivers for the negative investing activities number were
the purchase of property, plant, and equipment for $3.349 billion and the
sale of assets crediting cash for $1.441 billion.
 However, cash from operating activities total $8.519 billion and is more
than enough cash to pay for the investment in fixed assets.

At first glance, an investor might be concerned about negative cash flow in

investing activities totaling over $1.8 billion, but when we delve into the numbers,
we can see it's a positive sign. Exxon Mobil is an oil and gas producer and
needs to update its equipment, drilling rigs, and purchase equipment periodically.
As a result, the negative cash flow from investing means the company is
investing in its future growth.

On the other hand, if a company has a negative cash flow from investing
activities because it's made poor asset-purchasing decisions, then the negative
cash flow from investing activities might be a warning sign.

It's important to analyze the entire cash flow statement and all its components to
determine if the negative cash flow is a positive or negative sign. The most
effective way to evaluate a negative cash flow situation is to calculate a
company's free cash flow.