Question

Fiscal 2018 (Millions of $) Fiscal 2017 (Millions of $) $ value change % change Net...

Fiscal 2018

(Millions of $)

Fiscal 2017

(Millions of $)

$ value change

% change

Net Earnings

$91,465

$279,058

($187,593)

(67.2%)

Cash flows from operating activities

$758,580

$1,012,073

($253,493)

(25.0%)

Would the investors be happy or unhappy with this change?

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Answer #1

Answer---- the investors would not be happy.

.

The investors would not be happy because but only net income is decreasing the net cash flow from operations are also decreasing. Decrease in net income is an indicator that company has not performed upto it's potential and there are possibilities of more decline in future. Decreased cash flow also raises the insecurity for interest payment on the investments made by investors hence investors would be unhappy with the above situation.

A decrease in cash flow from operations alone would not be this worrying but when it comes with decrease income then it becomes an issue.

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