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Chemalite financed all of its start up costs through money contributed by the initial investors. Furthermore, it did not need any outside financing for operations during its first year. Therefore, the only claims on Chemalite’s assets are the investors.
Positive net income. It is common for a business to loose money during its first year because of startup costs. However, despite these costs and only selling products for half of its first year, Chemalite had a net income of 39,375.
Negative cash flow from operating activities. Although Chemalite had retained earnings, it had negative cash flow from operating activities because it sold on account...
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