Analyzing The Cash Flow Statement

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Analysing the cash flow statement would be a great place to first look when initially analysing a company. It is difficult for a company to manipulate the cash flow statements resulting in a honourable place to find the actual numbers. The cash flow statement is indicative of how well the company can convert net income into cash; it also helps to determine if a company is strong or weak. Panera realizes a positive net cash flow and is a strong company from their statements. To receive a deeper analysis, the three sections of the cash flow statements, cash flows from operations, cash flow from investing and cash flow from financing should be dissected. In the first section of cash flows from operations (CFO), Panera has had a strong and positive growth in cash flow from their operations from 2010-13 with a slight drop in 2104 due to the fact their net income decreased in 2014. During all five years, Panera stands in a upright position as their CFO is greater than net income. A ratio can be computed to see how high the quality of net income is by adding net income with deprecation dividing by the CFO shows that outside of 2010, net income proves to be of high quality. From the years 2011-2014 this ratio hovers around 90%, while in 2010 this ratio falters to 75% due to a high level of cash generated in accrued expenses. Although the net income remained high quality in 2014 it is concerning that figured dropped due to an increase in expenses.
Cash flow from investing
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