ACC140 Winter 2018: Financial Statement Analysis of BCE Company

This report provides a financial statement analysis of BCE Company, focusing on the parent firm, Bell Company, over three years. It evaluates the company's cash flow performance, highlighting its ability to generate cash from operating, financing, and investing activities. The analysis notes an increase...Read More

Running head: FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
Financial Statement Analysis of BCE Company
Name of the University:
Name of the Student:
Author’s Note:

1FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
Table of Contents
Analysis of Cash Flows of BCE Company..........................................................................2
References............................................................................................................................4
Appendix..............................................................................................................................5

2FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
Analysis of Cash Flows of BCE Company
Cash flow statement analysis of BCE Company is carried out by taking into account the
parent firm, Bell Company for the past three years. Such analysis is focused on evaluating the
cash flow performance of the company and explaining the ways in which the company is
performing in a better manner. It is gathered from the analysis that the company is generating
enough cash from its operating, financing and investing activities. In these major areas, all the
vital aspects of the business transactions are covered. For instance, it indicates the ways in which
BCE Company finances and purchases all its assets rather than just indicating the amount. It is
also observed that the cash and cash equivalents have increased from the year 2014 to 2016;
however, they have fallen significantly in 2015.
However, cash flow from the financing activities is observed to decrease and indicate a
negative change percentage of 13.40% in 2015 and 13.91% in 2016. Capital expenditures of the
company are observed to increase over the years from 2014 to 2016 with a percentage change of
4%. It is also observed from the cash flow statement of BCE Company that in the year 2016, the
operating activities cash flow increased by $369 million in contrast to the year 2015. This
happened mainly because of the reason of higher adjusted EBITDA, decreased acquisition along
with several costs paid.
In 2016, operating activities cash flows of BCE Company increased from $369 million in
contrast to 2015. This is basically because of highly adjusted EBITDA, decreased acquisition
along with several costs paid. This is partially offset by increased voluntary DB pension plan
contribution conducted in 2016. Free cash flow hat is present within the BCE’s common
shareholders increased by $227 million in 2016 because of increased cash flows from operating

3FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
activities. Moreover, this is partly offset through increased capital expenditures (Bhandari &
Adams, 2017).
In addition, it has been found out that the cash flows used in financing activities have
shown a declining trend of $327 million in 2015 and $294 million in 2015. This is because of the
increase in issuance of debt instruments and earnings from common shares. With the help of
such declining cash outflows, BCE Company has been able to retain higher cash in hand, which
would help them to invest in future business operations (Chen & Teng, 2015).
Along with this, the free cash flow depicts the cash that an organization could generate
after it has incurred amount needed to expand or diversify its asset base. In case of BCE
Company, increase in free cash flow could be observed due to the rise in operating cash flows
and fall in financing cash flows, even though the investing cash flows have increased
significantly over the years. With such trend, there has been decline in net cash at the end of
2015 for the organization by -79.65% due to significant rise in capital expenditures. However,
such expenditure is offset due to fall in financing cash flows in 2016. As a result, the net cash at
the end of the year 2016 has increased by 410.64%.

4FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
References
Bhandari, S. B., & Adams, M. T. (2017). On the Definition, Measurement, and Use of the Free
Cash Flow Concept in Financial Reporting and Analysis: A Review and
Recommendations. Journal of Accounting and Finance, 17(1), 11-19.
Chen, S. C., & Teng, J. T. (2015). Inventory and credit decisions for time-varying deteriorating
items with up-stream and down-stream trade credit financing by discounted cash flow
analysis. European Journal of Operational Research, 243(2), 566-575.

5FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY
Appendix
Figure 1: Trend analysis of cash flow statement of BCE Company for the years
2014-2016
(Source: As created by author)

6FINANCIAL STATEMENT ANALYSIS OF BCE COMPANY