Cash Flow - Analysis

•Alpha•Beta•Gamma

1a Major sources of cashALPHA

Sources 1991 1990 1989

Increase in short term borrowings

- - 139.8

Proceeds from disposable of

depreciable and other assets

157.0 242.0 94.1

Proceeds from the sale of discontinued

operation

25.3 407.3 -

Proceeds from long term debts

44.4 167.7 305.0

Proceeds from sale of class B common stock

5.0 8.7 17.5

Other - - 14.2

BETASources 1991 1990 1989

Proceeds of subordinate debt

- - 4400

Proceeds from the issuance of common stock

23.082 141 639

Sources 1991 1990 1989

Proceeds from issuance of debt

14,249 17,661 40,425

Issuance of treasury shares, including tax benefits

239,653 296,225 230,733

GAMMA

1b. USES OF CASH ALPHA

Uses 1991 1990 1989

Investment in depreciable assets

(129.7) (174.4) (303.6)

Investment in capitalized software

(27.8) (43.1) (59.5)

Other (6.0) (13.0) -

Decrease in short term borrowings

(2.6) (222.6) -

Payment of long term debt

(126.5) (554.8) (91.7)

Dividend paid - (7.2) (26.0)

Purchase of treasury of stock

(0.3) (0.6) (18.8)

Uses

1991 1990 1989

Capital expenditure (6,031) (4600) (3650)

Marketable securities purchases

(8000) - -

Net payments under working capital line of credit

- (2000) (860)

Net payments under equipments line of credit

(985) (126) (388)

Principal payment under capital lease obligation

(169) (213) (276)

Payments of subordinated debt

(5000) - -

BETA

Uses 1991 1990 1989

Payments to retire debt

(112,426) (20,896) (153,245)

Purchase of treasury shares

(240,719) (270,231) (814,958)

Purchase of plant, property and equipment

(737,548) (10,27,625) (12,23,038)

Increase of other asset net

(55,782) (75489) (67,642)

Purchase of Kinley business

(233,261) - -

GAMMA

2)22. Cash flow from operating activities > Net Income

ALPHA

Particulars 1991 1990 1989

Net income $(377.9) $(623.5) $(320.6)

Net income from operating activities

125.2 89.3 46.8

REASONS :

Adding non cash expenses (depreciation, amortization, gain from sale of investments etc)

Particulars 1991 1990 1989

Net income $6,323 $5,201 $417

Net income from operating activities

3,919 7,000 3,670

Difference between net income and net income from operating activities

BETA

REASONS:Depreciation and amortization is the major reason affecting the net income

Particulars 1991 1990 1989Net income $(617,427) $(74,393) $(1,072,610)

Net income from operating activities

1,040,901 1,434,074 1,479,391

Cash flow from operating activities> Net Income

GAMMA

REASONS :

Adding non cash expenses

3) Difference between operating activities and capital expenditure

Particulars 1991 1990 1989

Operating activities 125.2 89.3 46.8

Capital expenditure1) Investment in

depreciable assets

2) Investment in capitalize software

3) Other

(129.7)

(27.8)

(6.0)

(174.4)

(43.1)

(13.0)

(303.6)

(59.5)

14.2

No, the firm was not able to generate cash from operating activities because there was a huge investment made in depreciable assets

Difference between operating activities and capital expenditure

BETA

Particulars 1991 1990 1989

Operating activities

3919 7000 3670

Capital expenditure

(6031) (4600) (3650)

REASONS

For 1991 the operating activities < capital expenditure

For the other two years operating activities> capital expenditure

Difference between operating activities and capital expenditure

GAMMAParticulars 1991 1990 1989

Operating activities 1,040,901 1,434,074 1,479,391

Capital expenditure1) Purchase of plant,

property and equipment

2) Purchase of Kienzle business

(737,548)

(233,261)

(1,027,625) (1,223,038)

Yes, firm was able to generate cash from operating activities

4) ALPHA 1989 1990 1991

1. Net cash provided by operating activities

46.8 89.3 125.2

2. Capital expenditure (348.9) (230.5) (163.5)3. Dividend paid (26) (7.2) -

Company did not cover both the capital expenditure and the firm’s dividend payments during all the 3 years

1991 1990 1989

1. Net cash provided by operating activities

3919 7000 3670

2. Capital expenditure (6,031) (4600) (3650)

Excess cash - 2400 20

5)Investment of excess cash Beta

Investment of excess cash for the year 1990

1) Net payments under working capital line of credit-(2000)

2) Net payments under equipment line of credit-(126)

3) Principal payment under capital lease obligation-(213)

Investment of excess cashGAMMA

1991 1990 1989

1. Net cash provided by operating activities

1,040,901 1,434,074 1,479,391

2. Capital expenditure1) Purchase of plant,

property and equipment2) Purchase of kienzle

business

(737,548)

(233,261)

(1,027,625) (1,223,038)

Excess cash 70092 4,06,449 2,56,353

1) Payments to retire debt in the year 1990 for amount (20896)

2) Purchase of treasury shares in the year 1990(270,231)

Sources of Cash 1991 1990 19891. Net cash provided by

operating activities 125.2 89.3 46.8

2. Capital expenditure1) Investment in

depreciable assets2) Investment in capitalize

software3) Other

(129.7)

(27.8)

(6.0)

(174.4)

(43.1)

(13.0)

(303.6)

(59.5)

14.23. Dividend paid (26) (7.2) (26)

6)Sources of cash to pay capital expenditure/dividends(ALPHA)

The company generated funds to pay its capital expenditure or dividends

1) Proceeds from disposable of depreciable and other assets -

2) Proceeds from the sale of discontinued operations

3) Restructuring and other unusual items

6)Sources of cash to pay capital expenditure/dividends(BETA)

Sources of Cash 1991 1990 1989

1. Net cash provided by operating activities

3919 7000 3670

2. Capital expenditure (6,031) (4600) (3650)

The company generated funds to pay its capital expenditure or dividends

1) Issuance of common stock

Sources of Cash 1991 1990 1989

1. Net cash provided by operating activities

1,040,901 1,434,074 1,479,391

2. Capital expenditure1) Purchase of plant,

property and equipment2) Purchase of kienzle

business

(737,548)

(233,261)

(1,027,625) (1,223,038)

6)Sources of cash to pay capital expenditure/dividends(Gamma)

The company generated funds to pay its capital expenditure or dividends

1) Issuance of treasury shares, including tax benefits

2) Proceeds from issuance of debt

Particulars 1991 1990 1989

Current Assets 1) Accounts

receivable2) Inventory3) Other current

assets

160.880.217.0

73.4100.9(1.2)

(45.2)(3.0)(13.0)

Total 258 173.1 (61.2)

Current Liabilities1) Accounts payable2) Others (91.3)

2.8

(21.3)

14.1

41.0

(10.5)

Total (88.5) (7.2) 30.5

(CA-CL) 346.5 180.3 (91.7)

7) ALPHA

Particulars 1991 1990 1989 Current Assets 1) Accounts

receivable2) Inventory3) Other current

assets

(10,837)(951)(665)

(613)(810)366

(1,550)1043(762)

Total (12453) (1057) (1269)Current Liabilities1) Accounts

payable 5657 (310) 2067

Total 5657 (310) 2067

(CA-CL) (18110) (1367) (3336)

BETA

Particulars 1991 1990 1989

Current Assets 1) Accounts

receivable2) Inventory3) Prepaid Expenses

10597718,616(47,339)

(241357)99,743(90602)

(373,248)(62,942)18965

Total 77354 (232216) (417225)

Current Liabilities1) Accounts payable2) Customer

advances3) Other liabilities4) Restructuring

reserve

(17694)

922221263593160

107001

69207285175443544

30645

10584726576-

Total 668951 904927 163068

(CA-CL) 746305 (1137143) (580293)

GAMMA

CONCLUSION !!