ACC 556 WEEK 9 DISCUSSION

ACC 556 WEEK 9 DISCUSSION

"Cash Flows"  Please respond to the following:

For this week's discussion, research one (1) publicly traded company in which you are interested using the Internet and/or Strayer databases. Review its most recent statement of cash flows (SCF) on the company’s Website. Describe the 3 sections of the Statement of Cash Flow, and identify one major cash inflow or outflow in each. Describe the event behind the number.

Here's an example from Amazon's 2016 annual report. Look at the 2016 column 

Down here we see that the ending cash for 2016 is $19,334 million, about $19 billion. The SCF explains the change from 2015's ending balance of $15,890 to this new balance; an increase of $3,444.

Do you see the 3 sections of the SCF? Operating? Investing? Financing? Notice that Operations PROVIDED cash (net cash inflow) while Investing and FinancingUSED cash (net cash outflow). This isn't income, gain, or loss. This is cash flow. A company has to get cash from its operations. It may start off with debt or equity providing the cash, but if the company can't generate cash from its operations it will fail. How is Amazon doing? Pretty good, right?! Look at that trend! From about $6 billion in 2014 to about $16 billion in 2016. 

You can't identify any item in the Operations section of the SCF because these are all adjustments to convert the Net Income number to the Cash Flow number. This is all from operations. There may be some internal reports that show a breakdown, but it's not supplied to outsiders.

Now look at the Financing (or Investing )section. These both USED cash. Financing used almost $3 billion. How? or Why? A big part of this was the repayment of capital leases. I wonder if the new accounting for leases had anything to do with this... Maybe, regardless Amazon used over $3 billion of its cash to repay debts. See what else you can say about this statement or one of your choosing.

NOTE: MORE THAN ONE VERSION POSTED AS A BONUS CHOOSE ANY