Cashflow Statement Analysis

1

Cashflow Statement Analysis The company under consideration, in this case, is Sainsbury plc. This discussion takes an indepth look at the cash flow statement of the company. A cash flow statement is a financial statement that summarizes the amount of cash as well as the cash equivalents, which are leaving and entering a company. By analyzing the company's cash flow statement, it will be possible to ascertain how well the company can manage its cash position, thus indicating how well the company can pay its debt obligations and fund its operating expenses.

Buy this excellently written paper or order a fresh one from acemyhomework.com

2

Considering the company's performance by looking at the cash flows for the three consecutive years, i.e., 2019, 20020, and 2021, the company was able to record positive cash flows from the net operating activities, i.e., 1.16B, 1.69B, and 2.37B dollars respectively. This shows that the company is doing well when it comes to the generation of revenue from internal activities. The cash generated from the sale of service or products of the business is adequate to carry the business forward. Given that the company makes some surplus cash in this section, the creditors can consider it to be in a viable position. Activities that may be of interest for the creditors here will be the funds from operations, which are all positive and stable for the company and receivables, which were all below par for the first two years, but eventually stabilized in 2021 (Market Watch, 2021). This shows that the company is on the right trajectory as far as liquidity from the operations activities is concerned.

As for the investment activities, the performance of the company was a bit dismal.

However, this would be expected given that most of the investment was on capital expenditure, i.e., fixed assets. Cash generated from this activity was not sustainable as it was going to rob the company of its ability to function if the company opts to sell off all the assets. The creditors will expect the company to spend cash on the investing activities because it would be important that the company should maintain its assets at the very least. The net investing cash flow growth was negative for the last two consecutive years, with a much lesser negative percentage for 2021, which points towards an improvement trajectory. Activities of interest to creditors here include assets from acquisitions, of which the company did poorly and the purchase of investments that is also not well done (Market Watch, 2021). This calls for a better growth strategy that will, in turn, be reflected in the investment activities.

3

Considering the financing activities, some of the aspects which might be of interest include the change in long-term debt and all the activities revolving around the purchase and sale of dividends. For the past three years, the long-term debt for the company has been fluctuating from 27 to 26 to 37 billion dollars. The common dividends were 224, 212 and 230 billion dollars, respectively. The financing activities shows the efforts the company is putting in place in funding its business. There have been efforts to acquire additional capital to expand and maintain operations and access the capital market through the issuance of equity and debt (Market Watch, 2021). This gives the company a reputation that is considered enough for the creditors.

4

Reference Market Watch. (2021). J Sainsbury PLC. Retrieved from https://www.marketwatch.com/investing/stock/jsnsf/financials/cash-flow