Question

What do the cash flow statements show? What does this mean for the future viability of the firms? How helpful is this analysis in understanding the company’s stock price performance?

AuteSave om Search Dacumenti-Word X Hui Zifang Z Table Design File Home Insert Draw Design Layout References Mailings Review View Help Layout Share Comments 2018 2019 2020 Cash flows from operating activitics net income (loss) atter taxcs 256,195 73,916 -1,415,678 Adjustments for: Amortization of property, plant and equipment 81,387 89,903 90.744 337,582 163,N19 -1.324.934 Changes in Account receivable 443,060 -5,607 -738,234 Invenlories 683,811 346,485 -293,439 Prepeid cxpenses 8,610 4,414 4,800 Account payable -75,220 3.158 64.943 Corporle income laxes puyable 110,466 -240,954 -565,303 Deferred crpoate incume taxes I5,336 18.462 -99.320 1,186,063 125,958 ,536,153 Net cash from operating activities -747,317 400,807 -788,141 Cush lows frm investing activities (Increase) or decrease in property, plant and equipment -177,982 -154,747 97,171 prcees rm sale of (acquisition a) ther assels Cush lows from investing -21,79 -134.649 9.590 -134.549 -199,773 -214.337 activities Net cush from finuncing uctivities Procoeds fiom (repayment of) aotes payable 996,002 032,547 427.567 Proceeds frmlrepaymenl o long-lerm deh -11,933 192,972 421.730 Procccds from (rcpaymcnt of other liabilitics -3,784 -3,376 -13,648 Proceeds from issuing (repurchase of) share capital 14,184 6,007 -54,593 Dividends paid Net cush from (used in) financing activities -143.207 -143,343 30,218 818,894 716.898 115115 Net increase (decrease) in cash aud cash equivalents 228,425 128,196 101,754 209,794 311,548 Opening balance, cash and cash equivalents 337,990 Closing hulunce, cush and cush equivukents 209,794 311548 539,973 ctrl English United Stetes) DFocuS BE Page 2 of 2 772 wards 100 6:04 PM Type here to search W ENG 11/22/2019

Answer 1

The cash flow statements shows that the firm has been came under loss and losing cash, so firm has constantly raising cash through raising debts/liabilities and issuing shares. The firm’s collection from the debtors is very poor. Also, its inventory has raised in the year 2020 leading to blockage of cash in stocks.

The firms future viability is in great danger and its existence in the future with the rising losses is very less. The company’s cash would got blocked in Accounts receivable and Inventories, leaving no cash for operation. The raising of debt will increase the cost of borrowing ie. interest.

The company’s stock price would be constantly dropping on daily basis because through losing cash in operation will not allow paying of dividend for a long period of time. The EPS will drop in negative, which will reduce the P/E ratio of the company at the lowest level.