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What inferences do you draw from a cash flow statement for 1993? Is a breakdown bydivisions useful?
Would a cash flow statement be useful in evaluating performance? If you hadone that showed a breakdown by division, how would you use it?".
A cash flow statement helps to evaluate performance because:-
It determines the ability of the company and each division to generate cash flows fromoperations.
“Cash is king” for some analysts.
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We could see how is the cash for investments being allocated.-
How is the company financing their new capital expenditures, stocks or debt.A breakdown by division is very useful because:-
An analysis of the performance of each division is possible.-
Cash generated by division is a better metric of operational efficiency.I would use cash flow statements by divisions to:-
Determine if cash flows backup the current measurement of ROA.-
Find out which division is investing in new equipment and how.-
Compare each other division cash flows. As I mention later, I don’t think Professional
Services is being fairly compare with the other two divisions