Arden Group Cash Flow Analysis

1280 Words 6 Pages
Cash Flow: The Direct Method – Arden Group, Inc. Cash is the life blood of a business; having cash, a firm has more buying power, without necessarily having to borrow money. When a firm does borrow money, cash provides some protection against loan defaults. Having cash on-hand is important, “but cash flow indicates an ongoing ability to generate and use cash” (Kokemuller, 2018). One of the key measures of cash is the statement of cash flow, which has become a key financial statement that provides commercial lenders, equity analysts, investment bankers, and managers a “thorough explanation of the changes that occurred in a firm’s cash balances” (Gibson, 2013, p. 393). The statement of cash flow is made up of three elements: Operating activities, …show more content…
The report is using the direct method, which provides the information on the income statement on a cash basis; alternate styles of income statement presentations are indirect or reconciliation method, which uses an accrual method. The direct method is the preferred method of providing cash flows (Gibson, 2013, p. 395). The following is a three-year view of Arden Group, Inc’s Statement of Cash Flows:
Consolidated Statements of Cash Flows, with Three-Year Total (Total Column Added)
ARDEN GROUP, INC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands) Three-Year Total Fifty-Two Weeks Ended January 1, 2011 Fifty-two Weeks Ended January 2, 2010 Fifty-Three weeks ended January 3, 2009
Cash flows from operating activities:
Cash received from customers $ 1,328,266 $ 417,580 $ 431,108 $ 479,578
Cash paid to suppliers and employees (1,214,551) (384,624) (391,957) (437,970)
Interest and dividends received 4,658 1,580 565
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2010 costs were decreased significantly by use of cash in investing activities; however, the cash used in investing activities in 2011 nearly offset the 2010 investments completely.
5. Sales of investments along with a strong year in sales, and a strong cash position from 2008 to begin the year, helped to offset the large dividends paid in 2009. Consolidated Statements of Cash Flows for 52 Weeks Ending January 1, 2011
Viewing Inflows and Outflows Seperately
ARDEN GROUP, INC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS Percent
(In thousands) Inflows Outflows Inflow Outflow
Cash flows from operating activities:
Cash received from customers $ 417,580 86.23
Cash paid to suppliers and employees $ 384,624 89.10
Interest and dividends received 1,580 0.33
Interest paid 94 0.02
Income taxes paid 11,354 2.63
Net cash provided by operating activities 419,160 396,072 86.55 91.75
Cash flows from investing activities:
Capital expenditures 2,597 0.60
Purchases of investments 29,861 6.92
Sales of investments 51,926 10.72
Proceeds from the sale of property, plant & Equipment 16 0.00
Net cash provided by (used) in investing activities 51,942 32,458 10.73

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