Analysis of Cash Flows

800 word analysis based on the PDF document provided which includes Johnson & Johnson Consolidated statement of Cash Flow for 2010, 2011 and 2012.

The statement of Cash flows is separated into 3 sections for: Operating, Investing and Financing. This will be based on Johnson & Johnson Consolidated statement of Cash Flow for 2010, 2011 and 2012.

The operating section provides information on whether the company can provide positive cash flow from its operations. Ideally, a company showing a positive cash situation in this section shows that it has the ability to generate sales and collect its sales in order to pay off its operating expenses.
The investing section of the Cash Flow statements shows the inflows and outflows due to purchase of investments, and fixed assets as well as sales of these assets. Typically, if a company has a positive cash flow from operating then it can decide to make investing decisions.
Finally, the financing section will indicate how the company has financed their operations. Has the company obtained cash inflows from loans or sales of stock? or has the company had cash outflow to pay loans, pay dividends etc.