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Corporate Finance Insights

This document contains a case study on corporate finance for a student named Harvindran Chandrasekaran. It includes a statement of cash flows with figures in thousands for operations, investing activities, and financing activities showing a change in cash of $39,000. It also contains an analysis of operating cash flow, net capital spending, changes in net working capital, cash flow from assets, cash flow to creditors, and cash flow to stockholders to determine that cash flow to investors is $316,000. It asks questions about describing the company's cash flows, which cash flow statement more accurately describes cash flows, and comments on expansion plans in light of the cash flow analysis.

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Thiran Vinhar
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2K views4 pages

Corporate Finance Insights

This document contains a case study on corporate finance for a student named Harvindran Chandrasekaran. It includes a statement of cash flows with figures in thousands for operations, investing activities, and financing activities showing a change in cash of $39,000. It also contains an analysis of operating cash flow, net capital spending, changes in net working capital, cash flow from assets, cash flow to creditors, and cash flow to stockholders to determine that cash flow to investors is $316,000. It asks questions about describing the company's cash flows, which cash flow statement more accurately describes cash flows, and comments on expansion plans in light of the cash flow analysis.

Uploaded by

Thiran Vinhar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Corporate Finance Case Study

Name : Harvindran a/l Chandrasekaran


Id

: 21606

Course: Business Information System

Finance Case Study

Statement of cash flows in thousands


Operations
Net income
Depreciation
Deferred taxes
Changes in assets and liabilities
Accounts receivable
Inventories
Accounts payable
Accrued expenses
Other
Total cash flow from operations
Investing activties
Acquisition of fixed assets
Sale of fixed assets
Total cash flow from investing activities
Financing activties
Retirement of debt
Proceeds of long-term debt
Notes payable
Dividends
Repurchase of stock
Proceeds from new stock issues
Total cash flow from financing activities
Change in cash (on balance sheet)

Financial Cash Flow

$
$

742
159
109
(31)
14
17
(99)
(9)
902

(786)
139
(647)

(98)
118
5
(212)
(40)
11
(216)

39

Operating Cash Flow:


Operating Cash Flow = EBIT + Depreciation - Tax
= 1332 + 159 - 386
= 1,105

Net Capital Spending :


NCS= Ending Net Fixed Assets Beginning Net Fixed Assets + Depreciation
= 2,280 1,792 + 159
= 647

Changes in Net Working Capital :


Changes in Net Working Capital = Ending NWC Beginning NWC
= (1219-491) - (1154-568)
= 728 - 586
= 142

Cash Flow from Assets:


Operating Cash Flow

1105

Less: (Net Capital Spending)

(647)

(Changes in NWC )

(142)

Cash Flow From Assets

316

Cash Flow to Creditors :


Beginning long-term debt

$736

Ending long-term debt

(756)

Interest

95

Total

$75

Cash Flow to Stockholders :

Beginning total equity

$1,539

Ending total equity

(2,040)

Dividends

212

Retained earnings

530
$241

Cash Flow to Investors:


= Cash Flow To Creditors + Cash Flow to Stockholders
= 75+ 241
= 316

Questions:
1) How would you describe Warf Computers cash flows?
Warf Computers cash flow having inflow of operating activities and outflow from
financing activities but Warf Computers cash flow shows a good cash generating ability
therefore investors can invest in Warf Computers because it has a positive cash flow

2) Which cash flow statement more accurately describes the cash flows at the company?
Accounting Cash Flow shows more accurately because it shows investors each of the
activity and cash generation from the activities separately. All expenses and revenue to
the year, Investment and financial position shown in accounting cash flow. By this
investors can make decision to invest or not.

3) In light of your previous answers, comment on Nicks expansion plans.


Nicks expansion plain is favorable because it has positive cash flow according to
accounting cash flow statement although raising amount of debt and increase in equity.
This will give Nick revenue in the long run.

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