Cash Flow Analysis of Medical Supplies Pty Ltd, Advertising Company Ltd, and Wesfarmers

This document provides a cash flow analysis of Medical Supplies Pty Ltd, Advertising Company Ltd, and Wesfarmers. It discusses the net cash provided by operating activities, major receipts and payments, and recommendations for investment.

Running hand: ACCOUNTING AND MANAGEMENT DECISIONS
Accounting and management decisions – Week 9
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1ACCOUNTING AND MANAGEMENT DECISIONS
Table of Contents
PSB 11.6.....................................................................................................................................2
Cash flow of Medical Supplies Pty Ltd.....................................................................................3
Cash flow of Advertising Company Ltd....................................................................................4
Wesfarmers cash flow statement................................................................................................5
Reference....................................................................................................................................6

2ACCOUNTING AND MANAGEMENT DECISIONS
PSB 11.6
Transaction Where Reported Cash Inflow, Outflow, or No
Effect?
(a) Recorded depreciation
expense on the plant assets. O No cash flow effect
(b) Recorded and paid interest
expense. O Cash outflow
(c) Recorded cash proceeds from
a sale of plant assets. I Cash inflow
(d) Acquired land by issuing
common stock. NC No cash flow effect
(e) Paid a cash dividend to preferred
stockholders. F Cash outflow
(f) Distributed a stock dividend
to common stockholders. NC No cash flow effect
(g) Recorded cash sales. O Cash inflow
(h) Recorded sales on account. O No cash flow effect
(i) Purchased inventory for cash. O Cash outflow
(j) Purchased inventory on account. O No cash flow effect

3ACCOUNTING AND MANAGEMENT DECISIONS
Cash flow of Medical Supplies Pty Ltd
From analysing the cash flow statement of Medical Supplies Pty Ltd it can be
recognized that net cash provided by the operating activities of the company amounted to
70,000. A major receipt of the company is from customers and major payment is towards
employees and suppliers. However, it can be identified that the company is efficient in
generating positive amount from its financing activities and investing the surplus funds.
As the company is able to generate positive cash balance at the end of the year it is
indicating that it has sufficient cash to meet its operational and other expenses. Therefore, it
is stated that investing into this company is recommendable.

4ACCOUNTING AND MANAGEMENT DECISIONS
Cash flow of Advertising Company Ltd
From analysing the cash flow statement of Advertising Company Ltd it can be
recognized that net cash used by the operating activities of the company amounted to 13,000.
Further, it can be identified that the company has not sufficient amount for investing as cash
generated from financing activities are not sufficient to meet the operating expenses and
investing requirements.
As the company is not able to generate positive cash balance at the end of the year it
is indicating that it does not have sufficient cash to meet its operational and other expenses.
Therefore, it is stated that investing into this company is not recommendable.

5ACCOUNTING AND MANAGEMENT DECISIONS
Wesfarmers cash flow statement
From analysing the cash flow statement of Wesfarmers it can be recognized that net
cash provided by the operating activities of the company amounted to $ 3,791 million. A
major receipt of the company is from customers and major payment is towards employees
and suppliers. However, it can be identified that the company is not efficient in generating
positive amount from its financing activities as well as from investing activities. Large
amount of the company is paid towards payment for the PP&E and intangibles and for
payment of equity dividend (Group 2018).
As the company is able to generate positive cash balance at the end of the year it is
indicating that it has sufficient cash to meet its operational and other expenses. Further, it can
be identified that it is regular in paying dividends and making payment towards borrowings.
Therefore, it is stated that investing into this company is recommendable.

6ACCOUNTING AND MANAGEMENT DECISIONS
Reference
Group, D. 2018. Home . [online] Wesfarmers.com.au. Available at:
https://www.wesfarmers.com.au/ [Accessed 20 Dec. 2018].