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    Operating Cash Flow Statement Examples

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    Please see the attached spreadsheet. I have performed the calculations, and there is decidedly a downward trend in the ratios. I need to answer the following question on the usefulness of the statement in determining stock price performance and the company's condition.

    Queston: How did your view of the company's condition change once you had prepared and analyzed your statement of operating cash flows? How helpful is this analysis to understanding the company's stock price performance?

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    Solution Preview

    For your convenience, I have attached a formatted MS Excel file containing the information below, as well as reference sources which may prove useful in gaining a better understanding of the material.

    Financial ratios are a valuable and easy way to interpret the numbers found in statements.
    It can help to answer critical questions such as whether the business is carrying excess debt or inventory,
    whether customers are paying according to terms, whether the operating expenses are too high and
    whether the company assets are being used properly to generate income.

    Net Profit Margin
    From the information posted above, one can clearly see that the Company's net profit margin has basically been decreasing for the past five years, The profit margin is an indicator of a company's pricing policies and its ability to control costs. From the Company's extremely low ratio, it can definatley be stated that organizatio is having extreme difficulty in controlling its costs.

    Return on Shareholders' Equity
    The low percentage for shareholder's equity is an indication that the Company is not returning to its shareholder's something that is very important to them - value. With such a low return, investors will shy aware from investing in the organization, preferring money instead to place their into a company with a higher rate ...

    Solution Summary

    This file contains a formatted MS Excel spreadsheet containing examples of the cash flow statement