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Jan 9, 2024

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Company A Question 1 a. List major sources of cash: investment activities: sales of property and investments, proceeds from Business Unit b. List major uses of cash: operating activities c. Is cash from operations greater than net income? Cash from operations is less than net income d. List the major reasons for the difference between cash from operations and net income: The non- cash items, tax valuation allowance, gain on sales of assets, contribute significantly to the difference. These items increase net income; however, there were no cash involved in the transactions. The change in working capital almost plays a major role in the difference. e. Is cash from operations greater than capital expenditures? Cash from operation is greater than capital expenditure. f. Is cash from operations less than capital expenditures? And how did the company finance their capital expenditures? Cash from operation is not less than capital expenditures. The Company mainly finance their capital by selling their property and investment. g. What is the trend in net income? The net income of the company fluctuates, experiencing a decrease from 2015 to 2016 and a increase from 2016 to 2017; however the company suffered from a net loss for these 3 years h. What is the trend in cash from operations? Cash from operation did not materially change; Cash flow from operation were negative for these 3 years. i. What is the trend in capital expenditures? Capital expenditures decreased annually, and the spending primarily pertained to the purchase of property and equipment. j. What is the trend in working capital? Working capital was decreasing annually. Decreasing in Inventories and decreasing in deferred income taxes contribute significantly. Question 2 The overall rate of the cash flow situation stands at 1. The company is on the brink of bankruptcy. The majority of its cash sources come from the sale of property and investments, which suggests liquidation. Both the net income and cash flow from investments have been negative over the past three years, with no potential for upward movement. Additionally, the cash flow from operations cannot cover capital expenditure, indicating an adverse business situation. The working capital has also been decreasing annually, signaling an unhealthy business condition. All these facts and observations demonstrate that the company is in a dire situation.

Company B Question 1 a. List major sources of cash: In 2016 and 2017, the major sources of cash come from operation activities, in 2018, the major sources of cash come from both operation and financing activities b. List major uses of cash: investment activities, mainly Purchase of property and equipment c. Is cash from operations greater than net income? Cash from operations is greater net income d. List the major reasons for the difference between cash from operations and net income: The non- cash items, Remeasurement of preferred stock warrant liability, Stock-based compensation expense and Depreciation and amortization, contribute significantly to the difference. These items decrease net income; however, there were no cash involved in the transactions e. Is cash from operations greater than capital expenditures? Cash from operation is much greater than capital expenditure. f. Is cash from operations less than capital expenditures? And how did the company finance their capital expenditures? Cash from operation is much greater than capital expenditure. Company financed their capital expenditure by cash from operation g. What is the trend in net income? The net income of the company fluctuates, experiencing a significant decrease from 2015 to 2016 and an increase from 2016 to 2017, returning back to normal level. h. What is the trend in cash from operations? Cash from operations experienced a slight decrease from 2016 to 2017, followed by a significant increase later in 2017, almost doubling by the end of the of the year. i. What is the trend in capital expenditures? Capital expenditures did not materially change in 3 years. j. What is the trend in working capital? Working capital was decreasing annually. Increase in accounts payables contributes significantly. Question 2 The overall rate of the cash flow situation is 4. Predominantly, the primary sources of cash are derived from operations, and the CFO adequately covers capital expenditure. However, there are a couple of minor issues to note. First, the company's CFO is somewhat unstable, experiencing a slight decrease from 2016 to 2017. Second, the company's working capital has been decreasing annually, largely due to accounts payable.

Company C Question 1 a. List major sources of cash: the major sources of cash come from operation activities. b. List major uses of cash: investment activities, mainly Purchase of property and equipment. In 2017, another major use of cash is acquisitions. c. Is cash from operations greater than net income? Cash from operations is similar to net income. k. List the major reasons for the difference between cash from operations and net income: The non- cash items, depreciation, contribute significantly to the difference. Depreciation decreases net income; however, there was no cash involved in the transactions. d. Is cash from operations greater than capital expenditures? Cash from operations exceeds capital expenditure. However, in 2017, the cash from operations was insufficient to cover the purchase of property & equipment and acquisitions. e. Is cash from operations less than capital expenditures? And how did the company finance their capital expenditures? Cash from operations exceeds capital expenditure. Meanwhile the company also finance their capital from sales and maturities of marketable securities. f. What is the trend in net income? The net income of the company saw a significant increase between 2015 and 2016 and remained at the same level in 2017. g. What is the trend in cash from operations? Cash from operations experienced a large increase from 2016 to 2017 and experienced a slight increase in 2017. h. What is the trend in capital expenditures? Capital expenditures increase annually, due to an increase in purchases of property and equipment. i. What is the trend in working capital? Working capital decreased in 2015 and 2016. The Accounts Payable contribute mostly. However, in 2017, the company saw a large increase in working capital due to increase in inventory and account receivable. Question 2 The overall rate of the cash flow situation is 5. The primary sources of cash are derived from operations, and the CFO adequately covers capital expenditure. Although the company's working capital experienced a decrease in 2015 and 2016, it increased in 2017 with a large increase in inventory and account receivable. The trends of CFO and net income are fairly stable.

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Related Questions

e cash flow is Question 4Select one: Cash flow from operations plus investment Cash flow from operations less tax Net income recorded in the financial statements Cash flow from operations less investment
QUESTION 1: Describe what the cash flow statement shows? QUESTION 2: Explain why cash is important? QUESTION 3: A person wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to a person two reasons why these two numbers are usually different and provide an example for each difference?
Which one of the following is NOT an example of cash flows in operating activities according to direct method? Select one: a. Cash received from debtors b. Cash sales of goods and services c. Adding back depreciation expense d. Cash payment for purchase of inventories

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