Equity Investment Analysis and Analysis on Notes to the Financial Statements
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StatementofCashFlowandLiquidityAnalysis.edited.docx
Statement of Cash Flow and Liquidity Analysis
Maura Boyce
Brooke Call
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STATEMENT OF CASH FLOW AND LIQUIDITY ANALYSIS |
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STATEMENT OF CASH FLOW AND LIQUIDITY ANALYSIS |
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Verizon Uses Direct Method
Verizon uses the direct method to statement of cash flow. The technique requires the company to come up with the statement using the available cash from operating activities as opposed to the indirect method which starts the cash flow statement by net income from the income statement. Regardless of the method used, the final balances of the income statement must be equal. Other adjustments will be made after the net income from operation to get the balances.
Differences Between Net Income and Net Cash Provided by Operating Activities
When calculating the cash flow balances using net income from income statement the cash flow statement the following items are subtracted from the net income cost of sale, operational expenses, depreciation, amortization, interest, and taxes from total revenue. On the other hand, net income from operating activities is calculated as the sum of net income, the adjustment of noncash expenses and changes in working capital.
Significant Items in Cash Flows from Investing Activities
The significant items from investing include capital expenditures, acquisition of a business, acquisition of wireless licenses, the proceeds from the disposition of business. From the investing activities' information, we can conclude that the company invests more in the capital items that lead to the company to generating more objects through their provision of services. Verizon provides telecommunication. Thus much of the investments are made to improve the services provided.
Significant Items in Cash Flows from Financing Activities
The items that are present in the financing activities section include: proceeds from long-term borrowings, proceeds from asset-backed long-term borrowings, repayments of long-term borrowing and capital lease obligations, repayments of asset-backed long-term borrowings, decrease in short-term commitment, excluding current maturities, dividends paid, purchase of common stock for treasury, and net cash used in financing activities (Verizon, 2018). The information lets us know the primary sources of finances that the company uses to finance its operations. We can see that most of the funds that were used are from borrowings.
Verizon’s Disclosures About Liquidity
The disclosures of liquidity consist of Verizon's capital, debt and the revenue that they generate annually. Also, the company discloses the amount of stock that the shareholders have. This information can be used by the public to analyze the company when they want to invest in it.
Conclusion
With the addition of this data, the financial health of the company has slightly improved. The company has increased the revenue from the operating activities. One indicator the financial health of the company has risen from the last time is the stock price that has gone up. The improvement in the current ratio, quick ratio, and operating cash ratio is also an indication that the company is performing well.
References Verizon Communications Inc. (2018). Retrieved on 29 April 2018 from https://www.stock-analysis-on.net
