Warf Computers

1258 WordsMay 20, 20136 Pages
WARF COMPUTERS, INC. Financial Analysis Hirra Zahir, Marcus Vaughn, Alejandro Romero, Kevin Zabihi WARF COMPUTERS | Statement of Cash Flows | 2012 | ($ in thousands) | | | | | | | | | | Operations | | | | | | | | | Net income | | | | | $ | 896 | | Depreciation | | | | | | 191 | | Deferred taxes | | | | | | 130 | | Change in assets and liabilities | | | | | | | | Accounts receivable | | | | | (37) | | | Inventories | | | | | 17 | | | Accounts payable | | | | | 20 | | | Accrued expenses | | | | | (118) | | | Other | | | | | | (11) | Total cash flow from operations | | | | $ | 1088 | | | | | | | | |…show more content…
The company utilized most of the cash generated by operations to increase their fixed assets by almost 30%. Financing cash flows indicate an increase in long-term liabilities and dividends paid accounted for most of the negative cash flow from financing. In general, when more cash is generated than used, the dividends increase, some stock can be bought back, loans and accounts payable can be reduced, or investment can be made into another company. Warf computers’ finances are showing all the transactions. 2. Which cash flow statement more accurately describes the cash flows at the company? The financial statement of cash flow is typically used to recognize the firms’ ability to generate financial cash flow (Ross, Westerfield, & Jaffe, 2013). The accounting statement of cash flow is a more detailed method of managing cash flow. It explains the changes in cash flow and the firm’s ability to pay off short term loans (Ross, Westerfield, & Jaffe, 2013).One major difference that can be pointed out is the interest expense. Interest paid should go under financing activities; however, accounting cash flow statement deducts it as an expense from the net income. Therefore, I would say that financial cash flow gives a more accurate picture of the cash flows To compare the different cash flows, the operating cash flow of Warf Computers is the most accurate statement in representing the Company. It measures the cash generated
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