A Security Analyst Obtained the Following Information from Prestopino Products

question 34

Multiple Choice

A security analyst obtained the following information from Prestopino Products' financial statements: • Retained earnings at the end of 2009 were $700,000, but retained earnings at the end of 2010 had declined to $320,000.
• The company does not pay dividends.
• The company's depreciation expense is its only non-cash expense; it has no amortization charges.
• The company has no non-cash revenues.
• The company's net cash flow (NCF) On the basis of this information, which of the following statements is CORRECT?

• A) Prestopino had negative net income in 2010.
• B) Prestopino's depreciation expense in 2010 was less than $150,000.
• C) Prestopino had positive net income in 2010, but its income was less than its 2009 income.
• D) Prestopino's NCF in 2010 must be higher than its NCF in 2009.
• E) Prestopino's cash on the balance sheet at the end of 2010 must be lower than the cash it had on the balance sheet at the end of 2009.

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