Warf Computer
Bonnie Davis
Week One Assignment One
January 17, 2012
Table One
Warf Computer Statement of Cash Flows
Operations | | Net Income | $742 | Depreciation | $159 | Deferred Taxes | $109 | Changes in assets and liabilities | | Accounts receivables | -$31 | Inventories | $14 | Accounts payable | $17 | Accrued expenses | -$99 | Other | -$9 | Total cash flow from operations | $902 | | 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 |
Response Question One.Warf Computers financial position, in terms of its cash flows is positive. The company has positive earnings relative to its operations, has money to invest for it future, and was able to return money to its shareholders and pay its creditors.Response Question TwoJohn Tracy in his book How to Read a Financial Report, tells is that “cash flow is not a substitute for profit (Tracy, 2004, p. 83. Ross, Westerfield, and Jaffee provide several examples of how companies manipulated their data to increase operating cash (Ross, Westerfield, and Jaffee, 2010, p. 34). In the case of Warf, cash from financial activities paints a picture of positive financial decisions made by management.Response Question ThreeThe development of the virtual keyboard sounds promising, however, without a business plan and marketing strategy, it is difficult to say whether the investments made are will achieve positive results for the company. More details are required to evaluate the long term success. References | Ross, S.A., Westerfield, R.W., and Jaffe, J. (2010). Corporate
Week One Assignment One
January 17, 2012
Table One
Warf Computer Statement of Cash Flows
Operations | | Net Income | $742 | Depreciation | $159 | Deferred Taxes | $109 | Changes in assets and liabilities | | Accounts receivables | -$31 | Inventories | $14 | Accounts payable | $17 | Accrued expenses | -$99 | Other | -$9 | Total cash flow from operations | $902 | | 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 |
Response Question One.Warf Computers financial position, in terms of its cash flows is positive. The company has positive earnings relative to its operations, has money to invest for it future, and was able to return money to its shareholders and pay its creditors.Response Question TwoJohn Tracy in his book How to Read a Financial Report, tells is that “cash flow is not a substitute for profit (Tracy, 2004, p. 83. Ross, Westerfield, and Jaffee provide several examples of how companies manipulated their data to increase operating cash (Ross, Westerfield, and Jaffee, 2010, p. 34). In the case of Warf, cash from financial activities paints a picture of positive financial decisions made by management.Response Question ThreeThe development of the virtual keyboard sounds promising, however, without a business plan and marketing strategy, it is difficult to say whether the investments made are will achieve positive results for the company. More details are required to evaluate the long term success. References | Ross, S.A., Westerfield, R.W., and Jaffe, J. (2010). Corporate
References: | Ross, S.A., Westerfield, R.W., and Jaffe, J. (2010). Corporate Finance, 9th Edition. McGraw-Hill, Irwin, p.41-43.Tracy, John A. (2004). How to Read a Financial Report: Wringing Vital Signs Out of the Numbers. John Wiley and Sons. ISBN 0471646938. |