Week 1 Discussion 1 & 2 Response

Week 1 Discussion 1 Classmate Response

Guided Response: Review the posts from your classmates and respond to at least two. Compare and contrast the points you and your classmates made regarding the usefulness and purpose of the statement of cash flows. Each response should have a minimum of 100 words.

Below there are two of my classmate’s discussion that needs I need to response to their names are Madelin Mejia and Kenyatta Clinkscales

Madelin Mejia

Statements of cash flows is an analysis of the money that is circulating in the company. The analysis shows the money that the company is acquiring from its ongoing operations, as well as the money that the company is spending in order to operate their business (Block, Hirt & Danielsen, 2019). There are three primary sections found in this statement. They are cash flows from operating activities or the money collected from the continuous business activities, investing activities, or the funds used to purchase or sell capital assets and financing activities, which is the money the company uses to run operations (Block, Hirt & Danielsen, 2019).

Statement of cash flows produces useful information because it shows all the money that is available in order to run the company, additionally, to the potential money that the company will earn in the short term (Block, Hirt & Danielsen, 2019). It is essential for companies to have this information because the money will determine whether the company has enough capital to continue with ongoing operations. The statement of cash flows is useful when making business decisions. It allows the company to know where it stands, if it is in an excellent economic position to continue investing money and running transactions, or if the company is not running so well and could need a loan or save money to continue their business.

 

Deere & Company' Financial Statement

Operating activities in millions:

Inflow: Net income = $1635.9

Outflow: Trade, notes, and financial receivables = $2,731.3

 

Investing activities in millions:

Inflow: Collections of receivables = $9,175.3

Outflow: Cost of receivables acquired = $8,886.7

 

Financing activities in millions:

Inflow: Short-term borrowing = $1,570.4 & Long-term borrowing: $4,232.2

 

References: 

Block, S. B., Hirt, G.A., & Danielson, B. E. (2019). Foundations of Financial Management (17th ed.). Retrieved from  https://www.vitalsource.com/ (Links to an external site.) 

John Deere. (n.d.). Investor Relations (Link to an external site.) Retrieved from  https://investor.deere.com (Links to an external site.) 

Kenyatta Clinkscales

List the three primary sections found in the statement of cash flows:

The three primary sections found in the statement of cash flows are: Cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Explain how the statement of cash flows provides useful information that is not available in the other financial statements.

Other financial statements  are normally based on the accrual method of accounting, in which revenues and expenses are recognized as they occur, rather than when cash actually changes hands. 

Examine how this information can be useful when making business decisions.

The primary advantage of accrual accounting is that it allows us to match revenues and expenses in the period in which they occur in order to appropriately measure profit (Block, Hirt, & Danielsen, 2019). 

Looking at the financial statement you downloaded for Deere & Company in Part 1, identify the major inflows and outflows of cash for each section of the statement of cash flows.

Cash Flows from Operating Activities

Net income: $1,635

Asset Changes: 2,731

Cash Flows from Investing Activities

Collections of receivables (excluding receivables related to sales) 9,175.3

Proceeds from the sale of equipment on operating leases $823.4

Cash Flows from Financing Activities

Increase in total short-term borrowings 1,570.4  Proceeds from long-term borrowings 4,232.2

Payments of long-term borrowings (3,426.8)

 

References 

Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management. New York: Irwin. (17th ed.). Retrieved from https://www.vitalsource.com/