Evaluation and the supports of conclusion are provided below.
1. THE STATEMENT OF CASH FLOWS
To figure out the recent performance and financial position of the company and to make a conclusion about the credit risk, Comparative Statement of Cash Flows prepared based upon Comparative Balance Sheet and Statement of Income is below:
OPERATING ACTIVITIES Cash Provided ($) 1981 Cash Provided ($) 1982 Cash Provided ($) 1983
Net income 25,183 51,317 65,663
Adjustments
Depreciation 29,611 10,555 17,054
Due changes in working capital
Increase/Decrease in A/R (11,161) (28,563) (29,896)
Increase/Decrease in Inventories 16,717 (33,720) (20,693)
Increase/Decrease in Supplies & Prepaid Expenses (2,278) 665 1,260
Increase/Decrease in A/P 955 46,256 38,885
Increase/Decrease in Taxes other Than Income Taxes 801 1,934 255
Increase/Decrease in Accrued Liabilities 3,370 17,080 8,934
Increase/Decrease in Income Taxes Currently payable 573 20,172 (817)
Increase/Decrease in Deferred Income Taxes, Installment Sales 2,097 6,321 8,095
Increase/Decrease in Current Portion of Long Term Debts 1,895 2,940 (3,139)
Net Cash provided by operating Activities 67,763 94,957 85,601
INVESTING ACTIVITIES
Increase/Decrease in Investment and Other Assets (2,350) 12,017 (3,060)
Increase/Decrease in Property, Plant, and Equipment (20,654) (15,348) (24,779)
Depreciation (29,611) (10,555) (17,054)
Net Cash provided by Investing Activities (52,615) (13,886) (44,893)
FINANCING ACTIVITIES
Increase/Decrease in Long Term Debt (4,949) (22,611) (14,882)
Increase/Decrease in Deferred Credits 2,016 (3,710) 4,492
Increase/Decrease in Payment of Dividends (9,619) (11,032) (14,348)
Net Cash provided by Financing Activities (12,552) (37,353) (24,738)
SUMMARY
Net Change In Cash 2,596 43,718 15,970
Cash at The Beginning Of Year 8,212 10,808 54,526
Cash at The End Of Year 10,808 54,526 70,496
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RATIO ANALYSIS
2.1. LIQUIDITY RATIOS AND WORKING CAPITAL
2.1.1. LIQUIDITY RATIOS
1980 1981 1982 1983
Current Ratio 1 (With LIFO) 2.12 2.02 1.74 1.67
Current Ratio 2 (Without LIFO) 2.23 2.21 1.88 1.81
Quick, or Acid Test, Ratio 1.14 1.17 1.04 1.01
To see if the company is able to pay off its debts as they come due over the next year or so, two different current ratios are calculated... displayed 300 characters
