Question

Take a look at this companies cash flow statement. Analyze and describe the health of the company.

	2020	2021	2022
Net Cash Flow from Operations
Net Profit	$99,648	$1,025,766	$2,028,534
Depreciation & Amortization		$96,000	$96,000
Change in Accounts Receivable	($54,538)	($29,542)	($54,536)
Change in Inventory
Change in Accounts Payable	$8,815	($84)	($83)
Change in Income Tax Payable	$24,912	$39,199	$62,671
Change in Sales Tax Payable	$11,537	$7,866	$12,585
Change in Prepaid Revenue
Net Cash Flow from Operations	$90,375	$1,139,206	$2,145,171
Investing & Financing
Assets Purchased or Sold		($96,000)	($96,000)
Investments Received	$514,650
Change in Long-Term Debt	$20,000	($20,000)	$0
Change in Short-Term Debt	$0	$0	$0
Dividends & Distributions
Net Cash Flow from Investing & Financing	$534,650	($116,000)	($96,000)
Cash at Beginning of Period	$0	$625,025	$1,648,231
Net Change in Cash	$625,025	$1,023,206	$2,049,171
Cash at End of Period	$625,025	$1,648,231	$3,697,402

Answer 1

1. The net profit of the company have increased over the years. Which means the company is making good profit. The profit have almost doubled in the last two years, which is a good sign for the company.
2. The company is maintaining depreciation which means the company can purchase a new machinery in future with out any hurdle.The amount of depreciation can be used to purchase new machinery.
3. Income tax payable have been increased over the years which means the sales of the company are pretty good.
4. The same applies with the sales tax as well.
5. Assets are sold which means a good amount of cash is coming into business.
6. Investments are purchased in the first year which means it had been purchased from the liquid cash available.
7. Along term debt is repaid which means it have been paid from the liquid cash.
8. Net cash at the end of the period have been declined probable reasons behind it are repayment of debt,taxesetc.

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