Question

Comment on both Kelloggs’ cash flows (review the statement of cash flows).

Cash Flow All numbers in thousands Period Ending 12/29/2018 12/30/2017 1,254,000 Net Income 1,336,000 Operating Activities, Cash Flows Provided By or Used In Depreciation 516,000 481,000 Adjustments To Net Income -267,000 -292,000 Changes in Accounts Receivables 76,000 -1,300,000 Changes In Liabilities 115,000 193,000 Changes In Inventories -86,000 80,000 Changes in Other Operating Activities - 154,000 1,536,000 -13,000 403,000 Total Cash Flow From Operating Activities Investing Activities, Cash Flows Provided By or Used In Capital Expenditure -578,000 -501,000 Investments -397,000 -7,000 Other Cash flows from Investing Activities 55,000 -948,000 1.249,000 149,000 Total Cash Flows From Investing Activities Financing Activities, Cash Flows Provided By or Used In Dividends Paid -762,000 -736,000 Sale Purchase of Stock Net Borrowings 360,000 551,000 -11,000 -11,000 Other Cash Flows from Financing Activities Total Cash Flows From Financing Activities -566,000 -604,000 Effect Of Exchange Rate Changes 18,000 53,000 Change In Cash and Cash Equivalents 40,000 1,000

Answer 1

INTRODUCTION

                       CASH FLOW STATEMENT IS A STATEMENT OF RECORDING SYSTEMATICALLY ALL INFLOWS AND OUTFLOWS OF CASH OF THE ACCOUNTING PERIOD.

                        THE CASH FLOW STATEMENT IS PREPARED TO ANALYZE CHANGES IN THE FLOW OF CASH ONLY. THESE STATEMENTS FAIL TO CONSIDER THE CHANGES IN THE BUSINESS'S TOTAL FINANCIAL RESOURCES. IT DO NOT REVEAL SOME SIGNIFICANT ITEMS WHICH DO NOT AFFECT THE BUSINESS'S CASH OR WORKING CAPITAL POSITION, BUT CONSIDERABLY INFLUENCE THE FINANCING POSITION AND ASSET MIX OF THE BUSINESS.

                         CASH FLOW ACTIVITIES ARE TO BE CLASSIFIED INTO THREE CATEGORIES.THEY ARE:

1. OPERATING ACTIVITIES

2. INVESTING ACTIVITIES

3. FINANCING ACTIVITIES

       NOW WE CAN ANALYZE THE GIVEN CASH LOW. THE AMOUNT OF CASH FROM OPERATIONS INDICATES THE INTERNAL SOLVENCY LEVEL OF THE COMPANY IT IS INCREASED IN THE YEAR 2018. IT IS A KEY INDICATOR OF THE EXTENT TO WHICH THE OPERATIONS OF THE COMPANY HAVE GENERATED SUFFICIENT CASH FLOWS TO MAINTAIN ITS OPERATING POTENTIAL.

          CASH FLOWS FROM INVESTING ACTIVITIES INCLUDE THE MOVEMENT IN CASH FLOWS OWING TO THE PURCHASE AND SALE OF LONG TERM ASSETS SUCH AS MACHINERY, FURNITURE, LAND AND BUILDING ETC. CASH FROM INVESTING ACTIVITIES BECOME LOSS IN THE YEAR 2018. FROM THIS WE CAN UNDERSTAND THE CASH IS INSUFFICIENT TO INVEST IN LONG TERM ASSETS.

         CASH FROM FINANCING ACTIVITIES INCLUDE THE RESULT IN CHANGES IN THE SIZE AND COMPOSITION OF THE OWNER'S CAPITAL AND BORROWINGS OF THE ENTERPRISE. HERE IT UIS BETTER IN 2018 THAN 2017.

         THE NET INCOME INCREASED IN 2018. SO WE CAN CONCLUDE THAT THE CASH FLOW IS FAVORABLE TO ENTERPRISE IN 2018.