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
Capital Spending
Additions to net working capital
Cash Flow to investors in the firm


Warf Computers
Accounting Cash Flow Statement
$ Thousands

Net Income
Deferred Taxes
Changes in Taxes and Liabilities

Accounts receivable
Accounts Payable
Accrued Expenses
Total Cash Flow from operations
Investing Activities

Acquisition of fixed assets
Sales of fixed assets
Total cash flow from investing activities
Financing activities

Retirement of long-term debt
Proceeds from long-term debt sales
Change in notes payable
Repurchase of Stock
Proceeds from new stock issue
Total cash flow from financing activities
Change in cash

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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