You are evaluating two companies as possible investments. The two companies, which are similar in size, are commuter airlines that fly passengers up and down the West Coast. All other available information has been analyzed, and your investment decision depends on the statements of cash flows. Blue Yonder Airlines Statements of Cash Flows Years Ended November 30, 2013 and 2012
Operating activities: Net income (net loss) Adjustments for non-cash items:Total Net cash provided by operating activitiesInvesting activities:Purchase of property, plant, and equipmentSale of long-term investments Net cash provided by (used for) investing activities Financing activities: Issuance of short-term notes payable Payment of short-term notes payable Payment of cash dividends Net cash provided (used) by financing activities Increase (decrease) in cashCash balance at beginning of year Cash balance at end of year2013$ (67,000)58,000$ 198,000 (246,000) (51,000)$(63,000)79,000 16,000(9,000)(99,000) $(92,000) 106,000 $ 14,0002012$(140,000) 9,000$ 218,000 (183,000) (92,000)$160,000(13,000) 147,000(131,000)(57,000) $ (41,000) 147,000$106,000
Horizon, Inc. Statements of Cash Flows Years Ended September 30, 2013 and 2012
Operating activities: Net income (net loss) Adjustments for non-cash items:Total Net cash provided by operating activitiesInvesting activities:Purchase of property, plant, and equipmentSale of property, plant, and equipmentNet cash used for investing activitiesFinancing activities: Issuance of long-term notes payable Payment of short-term notes payable Net cash provided by financing activities Increase (decrease) in cashCash balance at beginning of year Cash balance at end of year2013$(395,000)69,000$ 198,000 (95,000)$ 264,00067,000 331,000(326,000)103,000 $ 108,000 176,000 $ 284,0002012$(610,000) 119,000$ 131,000 (26,000)$ 193,00079,000 272,000(491,000)105,000 $ (114,000) 290,000 $ 176,000
Discuss the relative strengths and weaknesses of Blue Yonder Airlines and Horizon, Inc. Conclude your discussion by recommending one of the companies’ stocks as an investment.