Question

Please analyze this company 10Q report and till me areas in which they are doing well and areas which need improvements.

	2018				2017
Cash Flows from Operating Activities
Net loss		$	(784,627	)		$	(397,181	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			416,233				376,602
Stock-based compensation			141,639				103,717
Amortization of debt discounts and issuance costs			39,345				31,747
Inventory write-downs			18,546				26,918
Loss on disposals of fixed assets			52,237				41,120
Foreign currency transaction losses			47,661				5,064
Loss related to SolarCity acquisition			-				11,571
Non-cash interest and other operating activities			(3,984	)			(6,589	)
Changes in operating assets and liabilities, net of effect of business combinations:
Accounts receivable			(169,142	)			91,541
Inventories			(322,081	)			(124,514	)
Operating lease vehicles			(97,196	)			(458,965	)
Prepaid expenses and other current assets			(50,001	)			(75,504	)
MyPower customer notes receivable and other assets			(57,583	)			8,006
Accounts payable and accrued liabilities			317,983				2,531
Deferred revenue			45,795				103,941
Customer deposits			67,359				(51,004	)
Resale value guarantee			-				184,579
Other long-term liabilities			(60,560	)			56,609
Net cash used in operating activities			(398,376	)			(69,811	)
Cash Flows from Investing Activities
Purchases of property and equipment excluding capital leases, net of sales			(655,662	)			(552,624	)
Purchases of solar energy systems, leased and to be leased			(72,975	)			(219,948	)
Business combinations, net of cash acquired			-				(109,147	)
Net cash used in investing activities			(728,637	)			(881,719	)
Cash Flows from Financing Activities
Proceeds from issuances of common stock in public offerings			-				400,175
Proceeds from issuances of convertible and other debt			1,775,481				1,838,166
Repayments of convertible and other debt			(1,389,388	)			(690,945	)
Repayments of borrowings under Solar Bonds issued to related parties			(17,500	)			(90,000	)
Collateralized lease (repayments) borrowings			(87,092	)			186,355
Proceeds from exercises of stock options and other stock issuances			94,018				57,307
Principal payments on capital leases			(18,787	)			(18,303	)
Common stock and debt issuance costs			(2,913	)			(11,094	)
Purchases of convertible note hedges			-				(204,102	)
Proceeds from issuances of warrants			-				52,883
Proceeds from investments by noncontrolling interests in subsidiaries			73,704				142,003
Distributions paid to noncontrolling interests in subsidiaries			(52,942	)			(63,696	)
Payments for buy-outs of noncontrolling interests in subsidiaries			(2,921	)			-
Net cash provided by financing activities			371,660				1,598,749
Effect of exchange rate changes on cash and cash equivalents and restricted cash			10,102				11,643
Net (decrease) increase in cash and cash equivalents and restricted cash			(745,251	)			658,862
Cash and cash equivalents and restricted cash, beginning of period			3,964,959				3,766,900
Cash and cash equivalents and restricted cash, end of period		$	3,219,708			$	4,425,762
Supplemental Non-Cash Investing and Financing Activities
Acquisitions of property and equipment included in liabilities		$	286,975			$	654,322
Estimated fair value of facilities under build-to-suit leases		$	56,169			$	65,244

Answer 1

Answer:

The statement of cash flows shows how a company spend its money ( cash outflows) and where money comes from (cash inflows). The cash flow statement include all the all cash inflows of a company receives from its ongoing operations and external investment sources as well as all cash outflows that pay for business activities and investment during given period.

Analysis of the three activities in the Cashflow Statement is given as under;

Cashflow used in Operating Activities:

• Income from operation (ie, sales)in income statement is very low and hence due to this cash inflow is negetive (ie, loss). It is better to increase sales or to reduce expenses for the same.
• Also, fund expended for working capital amangement is very huge. So the company need to pay attention to various Liquidity ratios, leverage ratios, activity ratios inorder to achieve better working capital management.
• Therefore the major operation of the comapny itself depicts negetive cashflow, if the company is continuing the same situation, it will leads to bankruptcy.

Cashflow used in investing Activities:

• In this period, the company purchased many investments from a source other than from the profit from diposal of the investments.
• Profit generated from disposal of investments is nil.
• Cashflow from investment is negetive because there is no return on investment during the period.
• So, the company need to use various investment appraisal tachniques inorder to ensure that concrened investment plan is financially feasible.

Cashflow from Financing Activities:

• The capital structure of company is funded mainly from convertible and other debts than from issue of common stocks and hence fianance cost expended is very high
• Major outflow of cash is happened because there is a redemption of convertible and other debt instruments.
• Company need to restructure capital strucure of the company so that capital structure become optimum.

Conclusion

As the fund is generated from financing activities of the company, it will affect the liquidity and continuity of the company as there is no other source of funds to meet operting and financing expenditure. If the company is continuing the same situation, it will leads to bankruptcy.