This week we are concentrating on the statement of cash flow (Bhandari, & Iyer, 2013) . Working income speaks to the money that streams all through the organization on an everyday premise.
Suppose that:-
Company chosen – Avery Dennison Corporation
| Particulars (‘000) | 31-Dec-16 | 31-Dec-15 | 31-Dec-14 |
| Operating cash flow | $ 585, 300 | $473, 700 | $ 354, 900 |
| Consent liability | $ 2, 004, 300 | $ 1, 459, 100 | 1, 593, 000 |
| Total Debt | $ 3, 470, 900 | $ 3, 168, 000 | $ 3, 309, 200 |
| No. of Shops | 91, 000 | 93, 000 | 96, 000 |
| Dividend | $ 142, 500 | $ 133, 100 | $ 125, 100 |
Delegate your assignment to our experts and they will do the rest.
Ratio 1 = Operating cash flow/ Consent liability
Ratio 2 = operating cash flow / Total Debt
Ratio 3 = Operating cash flow / No. of Shops
Ratio 4 = Operating cash flow / Dividend (McLean, & Zhao, 2014)
| Particulars (‘000) | 31-Dec-16 | 31-Dec-15 | 31-Dec-14 | Analysis remarks | |||
| Operating cash flow | $ 585, 300 | $473, 700 | $ 354, 900 | ||||
| Consent liability | $ 2, 004, 300 | $ 1, 459, 100 | 1, 593, 000 | Ratio significantly improved from 2014 to 2015 and afterward marginally diminished from 2015 to 2016. Generally, the organization is moderately increasingly more grounded to meet its present obligation mandatory when contrasted with 2014 dimensions. | |||
| Ratio 1 | 0.2920 | 0.3247 | 0.2228 | ||||
| Change in % | -10.05 % | 45.72% | |||||
|
Total Debt Ratio 2 Change in % |
$ 3, 470, 900 0.1686 12.78% |
$ 3, 168, 000 0.1495 39.42% |
$ 3, 309, 200 0.1072 |
Ratio fundamentally improved from 2014 to 2015 and after that somewhat improved from 2015 to 2016. By and large, the organization is moderately increasingly more grounded to meet its all-out obligation required when contrasted with 2014 dimensions | |||
| No. of Shops | 91, 000 | 93, 000 | 96, 000 | Ratio essentially improved from 2014 to 2015 and after that somewhat improved from 2015 to 2016. By and large, the organization can give higher money outpouring to investors when compared to 2014 dimensions | |||
| Ratio 3 | 6.4319 | 5.0935 | 3.6969 | ||||
| Change in % | 26.27% | 37.78% | |||||
| Dividend | $ 142, 500 | $ 133, 100 | $125, 100 | Ratio improved from 2014 to 2015 and from 2015 to 2016. In general, the organization circulated higher position of working money surge as profit to investors when compared to 2014 level (Kirkham, 2012) | |||
| Ratio 4 | 4.1074 | 3.5590 | 2.8369 | ||||
| Change in % | 15.41% | 25.45% | |||||
References
Bhandari, S. B., & Iyer, R. (2013). Predicting business failure using cash flow statement based measures. Managerial Finance , 39 (7), 667-676.
Kirkham, R. (2012). Liquidity analysis using cash flow ratios and traditional ratios: The telecommunications sector in Australia. Journal of New Business Ideas & Trends , 10 (1), 1-13.
McLean, R. D., & Zhao, M. (2014). The business cycle, investor sentiment, and costly external finance. The Journal of Finance , 69 (3), 1377-1409.
