Part 1: Must be a min of 250 words
Research one (1) publicly traded company in which you are interested using the Internet and/or Strayer databases. Review its most recent statement of cash flows and income statement on the company’s Website.
Part 2: Comment on the below post with a min of 150 words.
For a company is in the introductory phase of the corporate life cycle, positive cash flow is not expected. However, once a company reaches the maturity phase, the cash generated from operations exceeds investing needs. This is when the company should use excess cash to pay dividends, pay off debt and buy back stocks. To prevent the company from getting into the decline phase, excess cash should also be invested in new growth opportunities, acquisitions of other companies for widening the portfolio, high yield investments. This is also a good time to sue the cash to pay off pending lawsuits and invest money in the most important asset of a company, their employees.
Cash flow provides insight into a company’s cash generating ability. A&T reported Free Cash flow of 16.9 B in 2016 which is up compared to 15.87 in 2015. Also, AT&T reported Net Operating Cash Flow of 39.34B in 2016 which is up compared to 35.88 in 2015. Both these items on the Cash Flow statement indicate good future growth for AT&T. On the Income Statement, I would look at dividends to see how much cash was produced and used to pay out investors and also increase in Revenue that was up 163.79B in 2016 from 146.8B in 2015. These items on the income statement also indicate AT&T is a strong well managed company that investors should invest in.
The two items that I would suggest for investors are the Liquidity and Solvency Ratios. These ratios will allow the investor to see if the company will be able to remain liquid, and also be positioned to remain in business over the long term.