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    Chapter 2 Cash Flows at Warf Computers Inc

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    Tạ Công Khôi
    The document summarizes the cash flow of Warf Computer Inc. for the year. It provides details of cash flow from operating, investing and financing activities. The operating cash flow was $1322 thousand. The company spent $810 thousand on capital expenditures and $170 thousand on additions to net working capital. The total cash flow to investors was $342 thousand, which matched the total cash flow of the company. Both the financial and accounting cash flow statements showed positive results, suggesting the company's finances were well managed. The expansion plans were deemed appropriate as it would allow the company to gain more profits.

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    Chapter 2 Cash Flows at Warf Computers Inc

    Uploaded by

    Tạ Công Khôi
    824 views4 pages
    The document summarizes the cash flow of Warf Computer Inc. for the year. It provides details of cash flow from operating, investing and financing activities. The operating cash flow was $1322 thousand. The company spent $810 thousand on capital expenditures and $170 thousand on additions to net working capital. The total cash flow to investors was $342 thousand, which matched the total cash flow of the company. Both the financial and accounting cash flow statements showed positive results, suggesting the company's finances were well managed. The expansion plans were deemed appropriate as it would allow the company to gain more profits.

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    Financial Management

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    The document summarizes the cash flow of Warf Computer Inc. for the year. It provides details of cash flow from operating, investing and financing activities. The operating cash flow was $1322 thousand. The company spent $810 thousand on capital expenditures and $170 thousand on additions to net working capital. The total cash flow to investors was $342 thousand, which matched the total cash flow of the company. Both the financial and accounting cash flow statements showed positive results, suggesting the company's finances were well managed. The expansion plans were deemed appropriate as it would allow the company to gain more profits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    824 views4 pages

    Chapter 2 Cash Flows at Warf Computers Inc

    Uploaded by

    Tạ Công Khôi
    The document summarizes the cash flow of Warf Computer Inc. for the year. It provides details of cash flow from operating, investing and financing activities. The operating cash flow was $1322 thousand. The company spent $810 thousand on capital expenditures and $170 thousand on additions to net working capital. The total cash flow to investors was $342 thousand, which matched the total cash flow of the company. Both the financial and accounting cash flow statements showed positive results, suggesting the company's finances were well managed. The expansion plans were deemed appropriate as it would allow the company to gain more profits.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    The company gains profit from its operating activities and has enough profit to cover business activities and pay investors. However, investing activities require cash outflow for acquiring fixed assets.

    The cash flow statement shows operating cash flow, cash flow from investing activities, and cash flow from financing activities.

    Positive results within the cash flow statements suggest the business’s finances are managed very well. The company’s real cash flow positions are highlighted in the results.

    Group members:

    Tạ Công Khôi (group leader)


    Nguyễn Thị Khánh Huyền
    Trần Thị Hạnh Nguyên
    Ngô Thảo Vy
    Vũ Nguyễn Kỳ
    Nguyễn Thái Quang

    WARF COMPUTER, INC.


     Financial Cash Flow ($ in thousands)
    Cash flow of the firm:
    Earnings before interest and taxes $1598
    Depreciation 191
    Current taxes - 467
    Operating cash flow $1322
    Acquisition of fixed assets $1140
    Sales of fixed assets 330
    Capital spending $810
    Net working capital (2012) $874
    Net working capital (2011) 704
    Additions to net working capital $170
    => Total Cash flow of the firms = Operating cost – Capital Spending –
    Additions to NWC = 1322 – 810 – 170 = $342
    Cash flow to investors in the firm:
    Interest paid $ 105
    Ending long-term debt 907
    Beginning long-term debt 883
    Cash flow paid to creditors $ 81
    Dividends $225
    Stock sold 12
    Stock repurchased 48
    Cash flow paid to stockholders $ 261
    => Total cash flow to investors in the firm = Cash flow paid to creditors + Cash
    flow paid to stockholders = 81 + 261 = $ 342

     Accounting Cash Flow ($ in thousands)


    Operations
    Net income $896
    Depreciation 191
    Deferred taxes 130
    Changes in assets and liabilities
    Accounts receivable -37
    Inventories 17
    Account payables 20
    Accrued expenses 118
    Other -11
    Total cash flow from operations $1088
    Investing activities
    Acquisition of fixed assets $-1140
    Sales of fixed assets 330
    Total cash flow from investing activities $-810
    Financing activities
    Retirement of long-term debt $ -151
    Proceeds from long-term debt sales 175
    Changes in note payable 6
    Dividends -225
    Repurchase of stock -48
    Proceeds from new stock issue 12
    Total cash flow from financing activities $ -231
    Change in cash (on balance sheet) $47

    1. Operating cash flow is 1322 mil USD > 0 which means the company gains
    profit from its operating activities. Besides, the CF to investors is positive
    too, which means investors of the Warf Company are paid dividends and
    the company has profit enough to cover all business activities. Investing
    activities has the negative cash flow (-810<0) which means the company
    has been doing investing activities and especially fixed assets - which will
    generate benefit for the company in the future.

    2. Both types of cash flow, accounting and financial, are equally important to
    the business. Positive results within the cash flow statements suggest the
    business’s finances are managed very well (Lee & Parker, 2013). More
    accurate results are detailed in the financial statements of cash flow. The
    company’s real cash flow positions are highlighted in the results. The
    degree of cash flow can be used in order to service long-term debt and
    financing costs, and this can be seen in the financial statement of cash flow.
    Furthermore, the only major different between the financial statement of
    cash flow and the accounting statement of cash flow is the interest
    payment (whether it is listed in the operating section or financing section).
    However, with this case, the interest expense is meager ($105) so this
    would not affect much on the importance of the results from both
    statement of cash flow.

    3. Nick’s expansion plans are appropriate and favorable. It will allow the
    company to gain more profit:
     Positive cash flow, high revenue and return in investment that will make
    the company more attractive to investors and creditors in order to gain
    more outside finance
     Income and capital are also expanding: net income is $896 and fixed assets
    increase $619
     Business resources are also utilized appropriately and company
    management is proving beneficial in future expansion.

    Link file excel: https://docs.google.com/spreadsheets/d/1XKaM-


    DxBSVl37B6h_VdlaQMuIDP-HLW1/edit#gid=453933433

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