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Unformatted text preview: 2002 The business had a net loss of $2,154,000. This of course, was calculated by the accruals method. In order to reach the real cash flows, non-cash expenses had to be added back. Of these, the most important additions were loss from discontinued operations and notional interest on stock warrants; the two most important subtractions were in respect of deferred taxes and foreign currency exchange rate difference. The analysis of working capital showed that: • Receivables, inventory and tax payable increased by a significant amount. • Warranty costs, payables and other assets decreased, but by a lower margin. This shows that the working capital adjustments resulted in a gross outflow of cash thereby causing cash outflow in the form of operating activities. In investing activities, we see only one item and that is the purchase of fixed assets, therefore causing an outflow in terms of investing activities. In financing activities, the overall outflow was tried to be brought under control by means of share issue and borrowing modest debt, but rather due to previous commitments, the company had to buy back stock and also repay its existing debt. This caused another outflow of cash in financing activities. Since the results of operating, investing and financing activities This caused another outflow of cash in financing activities....
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This note was uploaded on 11/09/2011 for the course ACC 230 acc 230 taught by Professor Connie during the Spring '11 term at University of Phoenix.
- Spring '11