Cash Flow Stetement ETSY inc P&L & BS Ended 31 Dec 2020,2021, 2022 Cash Flow From Operations Net Income 2022 2021 2020 -691 488 353 Adjustments to reconcile Net Income to Net Cash provided by Operations: Depreciation and Amortizaion Gain/Loss on Sale of Assets Deferred income taxes Changes in assets and liabilities: increase in receviables Increase in Prepaid Expenses Increase in Accounts Payable Increase in Accrued Payroll 97 74 58 4 -5 4 -59 -84 -3 -15 -78 -104 29 -53 -17 1 -13 15 -2 22 21 Increase in Other Liabilities 16 80 228 Net Cash provided by Operating Activities Investing Activities -620 431 555 Purchases of Property, Plant & Equipment -65 -227 -21 Purchases of Intangible Assets -145 -142 -15 Purchases of Investments Proceeds from Sale of Investments -46 -181 -51 52 302 0 Net Cash used in Investing Activities -204 248 87 Financing Activities Proceeds from Issuance of Common Stock 183 125 240 Repurchase of Common Stock -398 -543 -7 Increase in Short-Term Debt 3 -9 3 Increase in Long-Term Debt Repayment of Long-Term Debt Increase in Capitalized Lease Obligations Net Cash provided by (used in) Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year 1. Declining Operating Cash Flows: Etsy's cash flows from operating activities have declined significantly, from $555 million in 2020 to $431 million in 2021, and further to -$620 million in 2022. This is a concerning trend, as it indicates the company is struggling to generate sufficient cash from its core business operations. 2. Aggressive Investing Activities: Etsy has been aggressively investing in its business, with cash used in investing activities increasing from $87 million in 2020 to $248 million in 2021, and $204 million in 2022. This includes significant investments in property, plant and equipment, intangible assets, and purchases of investments. While investments are necessary for growth, the magnitude of these investments relative to the company's declining operating cash flows is a potential cause for concern. 3. Fluctuating Financing Activities: Etsy's financing activities have been volatile, with the company raising significant long-term debt in 2021 ($1,279 million), but then repaying a portion of it in 2022 (-$1 million). The company has also been repurchasing its own shares, with $398 million in share repurchases in 2022, down from $543 million in 2021. These fluctuations in financing activities may be a sign of financial uncertainty or a lack of a clear long-term capital allocation strategy. Overall, the analysis of Etsy's cash flow statement suggests that the company is facing some financial challenges. The declining operating cash flows, aggressive investing activities, and volatile financing activities paint a picture of a company that may be struggling to maintain a healthy cash flow position. These trends warrant further investigation and close monitoring to assess the long-term sustainability of Etsy's financial health. 0 1,279 268 -1 -1 -17 -4 65 -9 -217 916 478 -1,041 1,099 946 985 1,669 723 1,172 985 1,669

Cash Flow Stetement ETSY inc P&L & BS Ended 31 Dec 2020,2021, 2022 Cash Flow From Operations Net Income 2022 2021 2020 -691 488 353 Adjustments to reconcile Net Income to Net Cash provided by Operations: Depreciation and Amortizaion Gain/Loss on Sale of Assets Deferred income taxes Changes in assets and liabilities: increase in receviables Increase in Prepaid Expenses Increase in Accounts Payable Increase in Accrued Payroll 97 74 58 4 -5 4 -59 -84 -3 -15 -78 -104 29 -53 -17 1 -13 15 -2 22 21 Increase in Other Liabilities 16 80 228 Net Cash provided by Operating Activities Investing Activities -620 431 555 Purchases of Property, Plant & Equipment -65 -227 -21 Purchases of Intangible Assets -145 -142 -15 Purchases of Investments Proceeds from Sale of Investments -46 -181 -51 52 302 0 Net Cash used in Investing Activities -204 248 87 Financing Activities Proceeds from Issuance of Common Stock 183 125 240 Repurchase of Common Stock -398 -543 -7 Increase in Short-Term Debt 3 -9 3 Increase in Long-Term Debt Repayment of Long-Term Debt Increase in Capitalized Lease Obligations Net Cash provided by (used in) Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year 1. Declining Operating Cash Flows: Etsy's cash flows from operating activities have declined significantly, from $555 million in 2020 to $431 million in 2021, and further to -$620 million in 2022. This is a concerning trend, as it indicates the company is struggling to generate sufficient cash from its core business operations. 2. Aggressive Investing Activities: Etsy has been aggressively investing in its business, with cash used in investing activities increasing from $87 million in 2020 to $248 million in 2021, and $204 million in 2022. This includes significant investments in property, plant and equipment, intangible assets, and purchases of investments. While investments are necessary for growth, the magnitude of these investments relative to the company's declining operating cash flows is a potential cause for concern. 3. Fluctuating Financing Activities: Etsy's financing activities have been volatile, with the company raising significant long-term debt in 2021 ($1,279 million), but then repaying a portion of it in 2022 (-$1 million). The company has also been repurchasing its own shares, with $398 million in share repurchases in 2022, down from $543 million in 2021. These fluctuations in financing activities may be a sign of financial uncertainty or a lack of a clear long-term capital allocation strategy. Overall, the analysis of Etsy's cash flow statement suggests that the company is facing some financial challenges. The declining operating cash flows, aggressive investing activities, and volatile financing activities paint a picture of a company that may be struggling to maintain a healthy cash flow position. These trends warrant further investigation and close monitoring to assess the long-term sustainability of Etsy's financial health. 0 1,279 268 -1 -1 -17 -4 65 -9 -217 916 478 -1,041 1,099 946 985 1,669 723 1,172 985 1,669

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 27BE

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