East Coast Yachts cash flows Essay
East Coast Yachts cash flows
When looking at a statement of cash flow it’s essential to find out what resources are being used under the operations category. As our text states, operating cash flow is really the cash flow generated by business activities, including sales of goods and services. Under this category organizations can also calculate tax payments, but not financing, capital spending, or changes in net working capital (Ross, Westerfield, Jaffe, & Jordan, 2009). When examining the East Coast Yachts cash flow statement we can see operating costs are just high enough to finance the company’s purchase of fixed assets. Understanding what information is under each category is a key concept to understanding how the cash flow statement is set up. Which cash flows statement more accurately describes the cash flows at the company?
The most accurate cash flow statement that describes the cash flows of East Coast Yachts would be the official accounting statement of cash flows. In this exercise there is only on cash flow statement so I would have to say this one would be the most useful when making business decisions. In light of your previous answers, comment on Larissa’s expansion plans. Overall, when and if Larissa plans an expansion for this company they must find a way to raise additional capital. Currently as it stands the company really doesn’t have the assets to make an expansion. They are barely covering their costs as is and the amount of money to expand is really not available to them at this time. Looking into other investors to fund this expansion could be an option.
Ross A Stepehen, Westerfield W Randolph, Jaffe F Jeffrey, Jordan D Bradford. (2009). Corporate Finance, Core principles and applications. Second edition. McGraw-Hill & Ir