Investment Analysis

Topics: Generally Accepted Accounting Principles, Cash flow, Cash flow statement Pages: 3 (263 words) Published: December 5, 2013

Warf Computers
Financial Cash Flow
$ Thousands

Cash Flow of the Firm

Operating Cash Flow
$1,322
Capital Spending
$810
Additions to net working capital
$170
Total
$342
Cash Flow to investors in the firm

Debt
$81
Equity
$261
Total
$342

Warf Computers
Accounting Cash Flow Statement
$ Thousands
Operations

Net Income
$896
Depreciation
$191
Deferred Taxes
$130
Changes in Taxes and Liabilities

Accounts receivable
$37
Inventories
$17
Accounts Payable
$20
Accrued Expenses
-$118
Other
$11
Total Cash Flow from operations
$1,088
Investing Activities

Acquisition of fixed assets
$1,140
Sales of fixed assets
$330
Total cash flow from investing activities
-$810
Financing activities

Retirement of long-term debt
$151
Proceeds from long-term debt sales
$175
Change in notes payable
$6
Dividends
$225
Repurchase of Stock
$48
Proceeds from new stock issue
$12
Total cash flow from financing activities
-$231
Change in cash
$1,252

1. How would you describe Warf Computers’ cash flows? The cash flows show a positive outlook for the company. Warf Computers shows an increase in cash and assets and a decrease in liabilities. Warf Computers also shows a positive cash flow from operating activities but has also invested in an abundance of assets.

2. Which cash flow statement more accurately describes the cash flows at the company? The financial cash flow statement more accurately describes the cash flows at Warf Computers. Although the accounting statement is more detailed, the financial statement produces the main financial picture of the company.

3. In light of your previous answers, comment on Nick’s expanision plans. Based upon the recent inquiry of fixed assets and the increased long-term debt from 2011 to 2012, my suggestion would be not to expand at this time. There needs to be an increase in net income and a decrease in spending.
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