Question

Cash Flows from Operating Activities
Net Income	$        539,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation expense	63,400
Increase in net accounts receivable	(376,000)
Increase in inventory	(396,000)
Increase in accounts payable	102,000
Decrease in accrued liabilities	(79,000)
Increase in income taxes payable	24,000
Gain on sale of land	(53,000)
Loss on sale of investments	6,000
Net cash provided(used) by operating activities		$(169,600)
Cash Flows from Investing Activities
Purchase of machinery	(102,000)
Proceeds from sale of investments	91,000
Proceeds from sale of land	104,000
Net cash provided(used) by investing activities		93,000
Cash Flows from Financing Activities
Issuance of Preferred Stock	80,000
Issuance of Bonds Payable	175,000
Payment of cash dividends	(114,000)
Purchase of treasury stock	(80,000)
Net cash provided(used) by financing activities		61,000
Net change in cash		(15,600)
Cash, January 1, 2015		68,000
Cash, December 31, 2015		$     52,400

Analyze the Cash Flow Statement for the Big Corporation).    You obviously do not have access to all relevant information but you can identify potential concerns or areas of strength. Try to consider what these could mean for the company. Were they planned or unplanned? You do not know for sure but you can make reasonable assumptions and consider possible effects for the company. (You can type your analysis directly on this word document.)

Analyze the Cash Flows from Operating Activities identifying areas of strength and areas of concern:

Analyze the Cash Flows from Investing Activities identifying areas of strength and areas of concern :

Analyze the Cash Flows from Financing Activities identifying areas of strength and areas of concern:

Provide a summary analysis.Explain how strengths and concerns from operating activities could potentially relate to investing and financing decisions:

Answer 1

Cashflow from Operating Activities

Refers to money generated by a company's core activities.

Area of Streangth from operating Activity

1)Increase in Credit period

2) Increase in Taxable Income

3) Gain on Non Operatinng Transaction (Sale of Land)

Area of Concern in Operating Activity

1) Increase in Debit period

2) Slow Moving Stock or Piling of Stock or Decrease in Stock Turnover Ratio

3) Loss making investment

4) Non Liquidated Operating Profit.

Analysis on Investing Activities

Means money made or spent on Long Term Assets the company has purchased or sold

Area of Streangth   

1) Investment on Plant & Machinery which will increase production effeicency and quality

Area of Concern

1) Selling of Company's Asset for liquidity

Analysis on Financial Activity

Measures the flow of fund or cash between a firm and its owners and creditor

Area of Streangth

1) Investment by owner in Preferred stock and lendor in Bond form

2) Investment in other business and Stratigic decision to invest in other company

Area of Concern

1) Declaration of Dividend resulted in Outflow of Cash which can be utilised in stratigic decision

Summary Analysis

From Investing: Upgrading eqipment and buing another company to take over its operations and gain access to its clients and technology are investment activities form a corporation's point of view.

From financing : It indicates the means by which a company raises cash to maintain or grow its operation.