Tasha's Discussion Analyzing The Statement Of Cash Flows

Tashas Discussionanalyzing The Statement Of Cash Flowsusing The Table

Tasha’s Discussion Analyzing the Statement of Cash Flows Using the table below, explain the difference between net income and cash flow from operating activities for Techno in 2009 and analyze their cash flows for 2008 and 2009. (in thousands) Net income $ 316,354 $ 242,329 Noncash charges (credits) to income Depreciation and amortization 68,591 Deferred taxes 15,814 $ 399,904 $ 327,734 Cash Provided (Used) by Operating Assets and Liabilities: Receivables (288,704) Inventories (159,554) Other current assets (1,832) Accounts payable, accrued liabilities 73,079 Total Cash Provided by Operations $ 24,525 $ 177,387 Investment activities Additions to plant and equipment (94,136) Other investment activities (14,771) Net investment activities ($ 79,768) ($ 127,907) Financing activities Purchases of treasury stock (45,267) Dividends paid (49,523) Net changes in short-term borrowing 125,067 Additions to long-term borrowings 135,610 Repayments of long-term borrowings (250,564) Net financing activities $ 165,353 ($ 262,677) Increase (decrease) in cash $ 110,110 ($ 213,197) Beginning cash balance 78,311 Ending cash balance $ 188,224 $ 78,114 Respond to at least two of your classmates’ posts.

WEEKLY REFERENCES: Required Resources Text Epstein, L. (2014). Financial decision making: An introduction to financial reports [Electronic version]. Retrieved from · Chapter 4: Elements of a Statement of Cash Flows Article Ford Motor Company. (2014). Ford Motor Company 2012 annual report (Links to an external site.)Links to an external site. . Retrieved from Recommended Resources Article Heakal, R. (2010, May). What is a cash flow statement? (Links to an external site.)Links to an external site. Forbes. Retrieved from Website AccountingCoach. (2014). Cash flow statement (explanation) (Links to an external site.)Links to an external site. . Retrieved from · Read Parts 1 through 8 Reply to Edward Smith Techno’s net income was 316,354 for 2009 which was accumulated after subtracting the depreciation and amortization and deferred taxes were deducted. The company’s cash flow for that same year was 24,525 after the net income of 399,904 (before deductions) was deducted from the total of their receivables, inventories and other current assets minus the accounts payables/accrued liabilities which is why the cash flow from operating activities are lower than the net income. Net income is also different from operating cash because it includes more deductions that are not considered income. Besides the net income, cash provided by operating assets and liabilities only has the accounts payable deductions. In 2009, Techno had more than a 100,000 higher ending cash balance than in 2008 as a result of having higher receivables and inventories. “Some companies pay out a portion of their profits in cash to their shareholders. Dividends received from the company's investments (such as stock owned in another company) are shown in the operating activities section of the statement of cash flows” (Epstein, 2014, p. 4.4). In comparison to 2008, Techno purchased an extra 6,000 in stock and paid more than twice as much dividends to shareholders. References Epstein, L. (2014). Financial decision making: An introduction to financial reports. Retrieved from (Links to an external site.) PCN-509 Counseling Disposition Reflection Worksheet Directions: Review the dispositions document and select three dispositions that you currently meet and that have helped you to be culturally competent. Complete the chart by listing the dispositions met as well as a description of how the disposition is met. Each description response should be 75-100 words in length. Dispositions Related to Cultural Competence Description of How the Disposition is Met 1. 2. 3. Directions: Now that you have identified dispositions that you currently meet, review the disposition document again and select two dispositions related to cultural competence that may be areas of improvement. Complete the chart below by adding the two dispositions you do not meet as well as a preliminary plan in regards to how you plan to improve the identified dispositions. Each description response should be 75-100 words in length. Disposition Description of How you plan to Improve the Disposition 1. 2. © 2016. Grand Canyon University. All Rights Reserved. © 2014. Grand Canyon University. All Rights Reserved.

Paper For Above instruction

The difference between net income and cash flow from operating activities is fundamental to understanding a company's financial health. Net income, also referred to as profit or earnings, includes all revenues and expenses, including non-cash charges such as depreciation, amortization, and deferred taxes. These non-cash items reduce net income but do not impact cash flow directly. In contrast, cash flow from operating activities reflects the actual cash generated or used during a period from core business operations, adjusting net income for changes in working capital and non-cash items, providing a clearer picture of liquidity.

Analyzing Techno's financial data for 2008 and 2009 reveals significant insights into their cash management and operational efficiency. In 2009, Techno reported a net income of $316,354, which was lower than the accumulated net income of $399,904 before deductions such as depreciation and deferred taxes. This discrepancy highlights the impact of non-cash charges on profit figures. The cash flow from operating activities in 2009 was $24,525, considerably less than the net income, primarily because of adjustments for receivables, inventories, and other current assets minus accounts payable and accrued liabilities. These working capital changes resulted in a cash usage that diminished overall liquidity despite positive net income.

Understanding the difference:

Net income is calculated on an accrual basis, which recognizes revenues and expenses when they are incurred rather than when cash is received or paid. This results in net income often being higher or lower than actual cash flows—especially if there are significant non-cash charges or changes in working capital. For example, increases in receivables or inventories indicate that the company has tied up cash, reducing cash flows. Conversely, increases in accounts payable can improve cash flow, as the company has delayed cash payments. Hence, cash flow from operating activities adjusts net income to reflect the cash effects of business operations more accurately.

Analysis of 2008 and 2009 cash flows:

In 2008, Techno exhibited a net cash increase of $78,114, whereas in 2009, there was a substantial increase of $188,224. This dramatic change is partly owing to variations in working capital, investment, and financing activities. In 2008, the company had less aggressive investment in plant and equipment but engaged in significant financing activities, including borrowing and repayment strategies. Additionally, their operating cash flow was higher in 2008, at $177,387, compared to just $24,525 in 2009, reflecting differences in working capital adjustments and operational efficiency. Despite the lower operating cash flow in 2009, Techno's overall cash position improved due to favorable financing activities and increased cash inflows from borrowing.

Financial insights and implications:

The comparison indicates that while net income is a vital indicator of profitability, cash flow from operating activities offers a clearer perspective on financial health and liquidity. Techno’s ability to generate positive operating cash flow in 2008 suggests better short-term financial stability than in 2009, where high receivables and inventories consumed cash despite high profits. This analysis underscores the importance for managers and investors to consider both net income and cash flows. The management's strategic financing activities in 2009 also contributed significantly to the cash position, emphasizing the role of effective capital management in maintaining liquidity and funding growth.

References

• Epstein, L. (2014). Financial decision making: An introduction to financial reports. Retrieved from [correct URL]
• Heakal, R. (2010). What is a cash flow statement? Forbes. Retrieved from [correct URL]
• AccountingCoach. (2014). Cash flow statement (explanation). Retrieved from [correct URL]
• Ford Motor Company. (2014). Ford Motor Company 2012 annual report. Retrieved from [correct URL]
• Penman, S. H. (2013). Financial statement analysis and security valuation. McGraw-Hill Education.
• Stickney, C. P., Weil, R. L., & Schipper, K. (2010). Financial reporting, financial Statement analysis, and valuation. Cengage Learning.
• White, G. I., Sondhi, A. C., & Fried, D. (2003). The analysis and use of financial statements. John Wiley & Sons.
• White, G. I., Sondhi, A. C., & Fried, D. (2003). The analysis and use of financial statements. John Wiley & Sons.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2012). Corporate finance. McGraw-Hill Education.
• Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage Learning.