The secondary offering of stock
Raised Capital = $180,000
Paid-in capital = $150,000
Common stock = $30,000
Increase in Inventory
Inventory = $34,000
Adjustment = $42,500
Total = $76,500
|Statement of Cash Flows For the Year Ended 31st December 2014|
|Cash flows from operating activities||In $||In $|
|Depreciation and amortization||$24,350|
|Increase in trade receivables||$36,500|
|Increase in inventories||($76,500)|
|Decrease in trade payables||($78,000)|
|Cash generated from operations||$67,000|
|Cash flows from investing activities|
|Purchase of property, plant, and equipment||($400,000)|
|Net cash used in investing activities||($400,000)|
|Cash flows from financing activities|
|Increase in common stock||$30,000|
|Additional paid-in capital||$150,000|
|Long term debt||$360,000|
|Net cash used in financing activities||$525,000|
|Net increase in cash and cash equivalents||$192,000|
|Cash and cash equivalents at the beginning of period||$30,000|
|Cash and cash equivalents at the end of period||$222,000|
According to the cash flow statement, the company has a positive cash flow from the operating activities (Epstein 402). The low depreciation amount shows that the company did not have many depreciable assets (Besley and Brigham 330). There is no record of loss in its trade receivables and hence it is expected that is will earn from this account. The adjustment on the inventories account was due to the goods that had not been sold (Yadav 211).
Nybrostrand has acquired lad that costs $400,000. It has a negative cash flow from the investing activities (Jones and Burger 315). But it raised capital through offering stock which increased its common stock and the paid-in capital. However, during the purchase of land, it took a long-term debt to carter for the same. During the end of year 2014, the company had a cash and cash equivalents of $192,000 (Gilert 120). It was higher than the balance carried forward from the previous year. The total cash and cash equivalents for the period was $222,000 (Tracy and Barrow 165).
The cash flow statement indicates that the company has positive growth in its investing activities. It has surplus cash which it can reinvest or plow back to the business activities. The company may not have cash flow problems in the near future. However, it has some long term financial obligations which may reduce its the cash flows for the next financial year.
Besley, Scott and Eugene F Brigham. Principles of Finance (Finance Titles in The Brigham Family). 6th ed. Boston, Massachusetts: Cengage Learning, 2014. Print.
Epstein, Lita. The Business Owner’s Guide to Reading and Understanding Financial Statements. Hoboken, NJ: Wiley, 2012. Print.
Gilert, Gillian. Sage 50 Accounts 2012. Southam, UK: In Easy Steps Limited, 2012. Print.
Jones, Peter and John Burger. Configuring SAP ERP Financials and Controlling. Hoboken, NJ: Wiley, 2009. Print.
Tracy, John A and Colin Barrow. Understanding Business Accounting for Dummies. Hoboken: John Wiley & amp; Sons, 2011. Print.
Yadav, Ranjeet. Oracle Peoplesoft Enterprise Financial Management 9.1 Implementation. Birmingham, UK: Packt Pub., 2011. Print.