Hello,
I know that the accounting exam is loaded with theory questions, so in preparation, I would appreciate if someone could review my answer to an analysis question, letting me know what I should remove, what I should add, what's wrong with it and how I can make it more concise.
here is the cash flow statement and my analysis of it.
Chapter 12: Exercise 8 - Cash flows: full statement
a
Pulsar Jetskis
Cash Flow Statement for year ended 31 March 2023
Cash flows from operating activities
Cash sales 90000
Collection from Accounts Recevable 32000
Commission 1000
GST collected 9100
Inventory (54040)
Interest (1660)
Advertising (6450)
Cartage Inward (1150)
Wages (32060)
GST Paid (9694)
Net cash provided by Operating Activities 27046
Cash flows from Investing activities
Delivery Truck 5500
Office Equipment (12300)
Delivery Truck (23000)
Net cash used by Investing activities (29800)
Cash flows from Financing activities
Capital 5000
Loan 13000
Loan repayment (4700)
Drawings (17900)
Net cash used by Financing activities (4600)
Net increase/decrease in cash held (7354)
Cash held at beginning of year: 1 April 2022 9245
Cash held at end of month: 31 March 2023 1891
Comment
Pulsar Jetskis experience a net decrease in cash held for the year ended 31 March 2023, of $7354. This could be considered as an unfavourable result. However, this decrease was primary due to a high level of investment in non-current assets during the period, and thus the cash position may be considered favourable due to the investment supporting increased efficiency of operations in future reporting periods. The firm generated $27046 from operating activities, which indicates favourable sales performance and expense control, allowing for the business to fund its investing and financing activities. $4600 was used in financing activities, with the majority of the outflow being traceable to the $17900 in drawings and the majority of inflow due to the $13000 loan. Although the loan may serve a productive function in the short-term, it is not a sustainable source of cash and may place a burden on the firms future cash position due to loan repayments and the associated interest expense. The cash performance of the firm is not indicative of the firms overall performance though, since net profit/loss has not been accounted for, nor has the cash position of the firm in prior reporting periods. Thus, in order to make a comprehensive anlaysis of the firms performance for the period, additional information is required
Thanks