Base company - Analyze the company’s investing and financing activities for thes
ID: 2587771 • Letter: B
Question
Base company - Analyze the company’s investing and financing activities for these years as identified in the statement of cash flows, specifically identifying the two largest investing activities and the two largest financing activities. Discuss whether you agree or disagree with the investing and financing strategies that your company appears to be employing and whether the company’s cashflow is well-managed.
Year Eaded December 3 In tallies, OPERATING ACTIVITIES Consolidated net income Depreciation and amortization Stock-based compensation expense Deferred income taxes EquityExplanation / Answer
Net Cash used in investing activities have considerably decreased in 2016 as compared to 2014 and 2015. This is on account of increase in revenues from the proceeds from disposal of investments, property, plant and equipments as well as proceeds from disposal of business. Simultaneously, there is a decrease in cash used in the purchase of investments, property, plant and equipment plus in the acquisition of business.
Net cash used in financing activities have increased in 2016 as compared to 2015. This is due to decrease in cash receipts on account of issuance of debt and stock. Howewer the payments of cash has increased on account of payment of debts, stock and dividends.
Two largest investing activities are:
(a) Purchase of investments - Cash outflow
(b) Proceeds from disposal of investmets - Cash inflow
Two largest financing activities are:
(a) Issuance of debt
(b) Payment of debt
Yes, overall the investing and financing strategies of the company are efficient. However, cash inflows can be increased through more issuance of stock. The company's cashflow is well managed considering that the cash balance at the end of the year is positive and the company is having liquidity to settle its short term liabilities.
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