John Wu is considering investing in Comtez Inc.Comtez is a software design company that is currently heavily involved in the development of a variety of programs to facilitate the implementation of e-commerce for small- to medium-sized businesses.When reviewing Comtez's financial statements, John noticed that the company seemed to have an unusually high cash balance.He is a little concerned that management may be manipulating cash flows, and if so, what should he look for to help him determine if management is trying to manipulate the cash balance?
Required:
Write a brief memo to John addressing his concerns.

Question

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The Answer of John Wu is considering investing in Comtez Inc.Comtez is a software design company that is currently heavily involved in the development of a variety of programs to facilitate the implementation of e-commerce for small- to medium-sized businesses.When reviewing Comtez's financial statements, John noticed that the company seemed to have an unusually high cash balance.He is a little concerned that management may be manipulating cash flows, and if so, what should he look for to help him determine if management is trying to manipulate the cash balance?
Required:
Write a brief memo to John addressing his concerns.

John Wu Is Considering Investing in Comtez Inc