Accounts Payable increased in both first years, especially in 1990. For 1991 the amount decreased. III) Assessment of the financial strength: Own assessment of the financial strength of the company, why? The Gamma Corporation realizes a process of restructure and acquisition. A lot of purchases of plant, property, and equipment and high values in depreciation and amortization describe the firm’s situation best whilst it is also well managed from a financial perspective.
Even though the reported net income of especially the last year 1991 shows a clear loss -? which may indicate a weak financial situation-? the corporation is still stable from a finance perspective and seems to prepare for the future. A restructuring reserve has been implemented which proofs the ongoing restructuring process. The net cash flows from operating activities show over all three years (despite a slight decrease) a financially stable situation in the case of operating cash flows.
Also, the corporation still disposes a huge amount of cash and cash equivalents so that no risk of bankruptcy can be perceived. The company has a safe line of cash reserves each year so far. The only thing unclear is the position of “Other adjustments” in all three years. All in all, Gamma Corporation seems to be on the right track and setup for the coming financial years.