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Unformatted text preview: phases, because the majority of its products are in a particular phase. Illustration 12-3 shows that the phase a company is in affects its cash flows. In the introductory phase , we expect that the company will not be generating positive cash from operations. That is, cash used in operations will exceed cash generated by operations in the introductory phase. Also, the company will be spending considerable amounts to purchase productive assets such as buildings and equipment. To support its asset purchases the company will have to issue stock or debt. Thus, during the introductory phase we expect cash from operations to be negative, cash from investing to be negative, and cash from financing to be positive. Illustration 12-3 Impact of product life cycle on cash flows...
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.
- Spring '11