Warf Computer Case Study

Topics: Cash flow, Generally Accepted Accounting Principles, Balance sheet Pages: 2 (446 words) Published: February 10, 2013
The cash flow at Warf Computers, Inc. is as follows:
Net Income $896
Depreciation $191
Deferred Taxes $13
Changes in assets and liabilities
Accounts receivables -$37
Inventories -$17
Accounts payable $20
Accrued expenses -$118
Other -$11
Total cash flow from operations $937
Investing Activities
Acquisition of fixed assets -$786
Sale of fixes Assets $139
Total cash from investing activities -$647
Financing Activities
Retirement of long term debt -$98
Proceeds from long term debt sales $118
Change in notes payable $5
Dividends -$212
Repurchase of stock -$40
Proceeds from new stock issue $11
Total cash from financing activities -$216
Change in cash $39
Description of Cash Flow for Warf Computers, Inc.
Overall company cash flows is positive. The company has positive outcome in regards to its earnings. The company has the monetary means to invest in the future, and was able to return money to its shareholders and pay its creditors/lenders. The company appears as it will be able to cover payroll and immediate expenses. It is appealing to potential lenders, investors, employees and shareholders. Cash Flow Statement that Accurately Describes the Cash Flow at the Company According to Jaffe, et al. (2012), “perhaps the most important item that can be extracted from financial statement is the actual cash flow of a firm” (p. 29). It seems there are several methods of manipulating data to increase operating cash in order to increase the value of the firm and its perceived ability to produce more cash flow. An accurate statement that describes the cash flow at the company is “cash flow is not the same as net working capital” (Jaffe, et al. 2012 p. 29). Cash flow utilizes both inventory and cash as current assets. In regards to Warf Computer’s, Inc., financial decisions within the company provides a positive insight to the management of the company. Expansion Plans of Nick Warf

The expansion plans...
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