Joined: 07 Jan 2010
Online Status: Offline Posts: 1
Posted: 07 Jan 2010 at 16:32 | IP Logged
The year 2006 was not a particularly pleasant year for the managers of
XYZ Corporation, or its shareholders. The company’s stock price had
already fallen in the previous year from $60 per share to $30. Just
when it seemed things couldn’t get worse, XYZ’s stock fell to $4 per
share. The data below were taken from the December 31, 2006
statement of cash flows of XYZ. All dollars are in millions.
Cash used in operating activities $(663)
Cash used in investing activities (644)
Financing activities:
Dividends paid $(587)
Net cash received from issuing debt 3,498
Cash provided by financing activities 2,911
Discuss the reactions of XYZ’s creditors and investors to this
information. What other information would be important for XYZ’s
creditors and investors to see?
Joined: 11 Jan 2010
Online Status: Offline Posts: 1
Posted: 12 Jan 2010 at 13:23 | IP Logged
Cash used in opearting acvities is a indicator of the net income for the company.If the cash from operating activities is more than the net income of the company it indicates the company is doing good,on the other hand if the net income is more than opearting activies than it indicates company is not doing good.
Cash used in investing activities if a company purchases long term assets than it will be shown as a -ve amount, hence company has made more purchases.
As cash received by debt is more it implies that company will have to more interest.
Shareholders would like to know what investments are as that will indicate about the growth in coming years.
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Topic: Analysis of Cash Flows?
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