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Financial Statement Review & Analysis

From the Apex financial statement in the attachment below, Calculate:
- The company's total profit
- The company's cash flow from operating activities
- The company's cash flow from investing and financing activities (include primary sources and uses of cash in each area)
- The company's total cash, inventory, and retained earnings (include 2-year trend for each)
- Provide and include trend analyses of critical financial statement elements, as well.


Solution Preview

Based upon the information provided, there are no real calculations to be made, rather there are observations from the statements provided which provide the information requested from the information above, to wit:

* Company's total profit: based upon the income statement, the total profit for 2013 (before taxes ) was 61,250, and for 2012 was 36,500. After taxes (net profit) for 2013 was 26,250, and for 2012 was 6,500.

* Cash flow from operating activities (using the cash flow statement provided) for 2013 was positive 55,350. Now this amount includes depreciation of 27,850. The current trend is to include depreciation as a positive entry for cash flow, but we must recognize that depreciation is NOT a cash account. It represents the reduction in value of long term assets as a result of use over time --- stated another way, it allows us to recover the value of the long term assets over time (except for land which is a NON depreciable item). Depreciation acts as a positive toward cash flow in the sense that it reduces the amount of taxes we pay, resulting in retaining cash within the business (but it usually does not have a dollar for dollar impact on taxes). Therefore we need to be careful how we report and view depreciation as a cash flow item.

* Cash flow from investing and financing activities (using the cash flow statement provided) for 2013 it shows a negative cash flow ...

Solution Summary

A review of financial statements and interpretation of performance results.