Using the link, answer these questions about the company: https://wwwimages2.ado
ID: 2406389 • Letter: U
Question
Using the link, answer these questions about the company:
https://wwwimages2.adobe.com/content/dam/acom/en/investor-relations/pdfs/ADBE-10K-FY17-FINAL-CERTIFIED.pdf
1) How much was the net cash flow from operating activities? _____________________
i. Was it an inflow or an outflow of cash? ____________________
ii. What does this tell us about your assigned company?
2) How much was the net cash flow from investing activities? ____________________
i. Was it an inflow or an outflow of cash? _____________________
ii. What does this tell us about your assigned company?
3) How much was the net cash flow from financing activities? ______________________
i. Was it an inflow or an outflow of cash? ______________________
ii. What does this tell us about your assigned company?
4) Calculate the company’s operating cash flow to sales for both the most recent year and the prior year using the formula provided in the textbook.
i. Show your computations. Formula:
Most recent year:
Prior year:
Explain what information this ratio provides (define), and what the results mean specifically to your company.
5) Imagine that a client has just inherited $300,000 and is considering investing in the company you have analyzed by purchasing common stock. Assume your client has to choose only one company and cannot diversify his/her investment. What is your recommendation based on the work you have completed? Buy or pass? Why?
Explanation / Answer
note:- $ in millions
1) How much was the net cash flow from operating activities?
Answer:- $ 2912.9
i. Was it an inflow or an outflow of cash?
Answer:- It is an Inflow of cash.
ii. What does this tell us about your assigned company?
Answer: -
According to the positive cash flows of the company, we can say the company is in Growth stage.
2) How much was the net cash flow from investing activities?
Answer: - ($ 442.9)
i. Was it an inflow or an outflow of cash?
Answer: - It is an out flow of cash.
ii. What does this tell us about your assigned company?
Answer:-
According to the negative cash flows of the investing activities, we can say the company is in Growth stage. Because the negative cash flows in investing activities may arise when a new machinery was purchased or company is planning to expand its business etc. which can be possible only when a company is in Growth stage.
3) How much was the net cash flow from financing activities?
Answer: - ($ 1183.7)
i. Was it an inflow or an outflow of cash?
Answer: - It is an out flow of cash
ii. What does this tell us about your assigned company?
Answer:-
According to the negative cash flows of financing activities, we can say the company is I Growth stage. Because the negative cash flows in financing activities may arise when own stock was purchased back, loans were repaid or dividends were paid etc. which show company is sustainable and it is in Growth stage
4) Calculate the company’s operating cash flow to sales for both the most recent year and the prior year using the formula provided in the textbook.
i)Show your computations.
( Current year 2017, most recent year 2016, prior year 2015 as per the link provided )
Formula:
Operating cash flows / Net sales
Ratio
Most recent year: 2016
2119.7 / 5854.430
36.206
Prior year: 2015
1469.5 / 4795.511
30.643
Explain what information this ratio provides (define), and what the results mean specifically to your company.
Answer:-
The above ratio of Operating cash flows to net sales provides the information about the ability of the company to generate cash from its sales. In cash from operating cash flows, net profit is adjusted with changes in working capital and non cash incomes and expenses. So, it shows the cash profit of a company. With a positive cash flow we can know it is able to sustain in future and is able to reinvest or expand its operations and so we can say it is in Growth stage. The above result shows that the company’s “ operating cash flows to net sales ratio” has been increased from 30.643 to 36.206 and it is in Growth stage.
5) Imagine that a client has just inherited $300,000 and is considering investing in the company you have analyzed by purchasing common stock. Assume your client has to choose only one company and cannot diversify his/her investment. What is your recommendation based on the work you have completed? Buy or pass? Why?
Answer:-
My recommendation to my client is to invest the amount of $ 300,000 in the present considering company. Because it is in growth stage (according to the above given calculations). so, by investing in this company my clients wealth may be increased in the nearby future. The companys Opearing cash flows are postive which shows company is in profits, negative operating and financing cash flows shows comany is able to pay off its debts and pay to creditors and also able enough to pay its dividends. As the above explanation says the company is in Growth stage and I recommend my client to invest in this company.
Formula:
Operating cash flows / Net sales
Ratio
Most recent year: 2016
2119.7 / 5854.430
36.206
Prior year: 2015
1469.5 / 4795.511
30.643
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.