A Security Analyst Obtained the Following Information from Prestopino Products

question 39

Multiple Choice

A security analyst obtained the following information from Prestopino Products' financial statements:
∙Retained earnings at the end of 2014 were $700,000,but retained earnings at the end of 2015 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) for 2015 was $150,000.
On the basis of this information,which of the following statements is CORRECT?

• A) Prestopino had negative net income in 2015.
• B) Prestopino's depreciation expense in 2015 was less than $150,000.
• C) Prestopino had positive net income in 2015,but its income was less than its 2014 income.
• D) Prestopino's NCF in 2015 must be higher than its NCF in 2014.
• E) Prestopino's cash on the balance sheet at the end of 2015 must be lower than the cash it had on the balance sheet at the end of 2014.

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