Cash Flow Analysis

1450 words - 6 pages

Cash Flow Analysis1. Cash ratio is known as "absolute current ratio", derived from further correction based on quick ratio, is most conservative indicator to evaluate short-term liquidity and to reflect direct debt-paying ability of the company. Cash ratio will examine the actual liquidity of the company from dynamic points of view of cash inflow and outflow, so is a more cautious indicator to evaluate short-term solvency of a company. This indicator is bigger will mean the company has more net cash flow produced from operations that can guarantee the company to liquidate matured debts on time. Higher cash ratio means better benefit for the creditors, and it is more than 1 will mean the company is able to liquidate current liabilities just depend on cash and equivalents. However, for the company, it is just the reverse, because assets liquidity is in reversely proportional to its profitability, the best liquidity of cash will reduce the profitability of the company, so the company is unwilling to maintain high cash ratio.The company's cash flow is constituted of operating activities, investing activities and financing activities three parts. Analysis of cash flow and its structure, we can understand the ins and outs of company cash receipts and payments, and evaluate business conditions, fund-raising ability and financial strength.First of all, we can separately calculates management cash inflow, investment cash inflow and the fund raising cash inflow accounts for the proportion which the cash always flows in, the understanding cash main origin. Generally speaking, the management cash inflow accounts for the cash always to flow in the proportion big enterprise, the management condition is good, the financial risk is low, the cash inflow structure is reasonable. Next, calculates management cash disbursement, investment cash disbursement and the fund raising cash disbursement separately accounts for the proportion which the cash always flows out, it can reflect specifically which aspects enterprise the cash does use in. Generally speaking, the management cash disbursement proportion big enterprise, its production management condition is normal, the cash disbursement structure is reasonable. Operating cash primary from of the financial institutions and deposit, and which is predominated in the BOQ, the company cash always flows in the managerial inflows account for 40.76%, the investment inflow accounts for 19.9%, the fund raising inflow accounts for 39.34%, it explained operating activities hold the important status, financing activities of the company are also important aspects of the source of the cash inflows.2. Due to the operating, investing and financing activities are able to bring an influx of cash and, therefore, they should focus on the analysis of inflows. Inflows from operating activities in the company, the main business revenue from sales 86.6%, VAT 12.39%, which reflecting the company's operation is normal; Inflow of investment...

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