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Hi Fools,

I need help with a couple of items. Please, and thanks in advance.

(1) In all of the literature that I have read(including TMF Investment Workbook), no one seems to place any real importance on the "Financing Activities" section of the Cash Flow Statement. It seems, based on the few that I have studied, these activities can make or break whether a company has a positive or negative cash flow and it would seem intuitive that these activities are a measure of how well management is using our money. Where am I wrong(and why)regarding my observations?

(2) I can flow pretty well from one financial statement to the other. However, "retained earnings" is eating my lunch. Considering the fact that earnings are not necessarily cash, then how does one retain an earning and what does a company do with these retained earnings? I ask only because it would seem all my expenses have been paid, I have used some of my earnings on capex, I have re-purchased stock, etc. In summary, I've gotten a little lost on the shareholders equity portion of the balance sheet and how that ties to the cash flow and income statement.

I sincerely apologize for the length of the post. Thanks for any response.

scarbdr
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