Cash Flows and Financial Statements and Sunset Boards, Inc

CASH FLOWS AND FINANCIAL STATEMENTS AND SUNSET BOARDS INC 4

CashFlows and Financial Statements and Sunset Boards, Inc

Question1:

Thecash Flows for this company for 2010 shows that the management isdoing a commendable job in ensuring that the invested funds arerealized on time to facilitate the much-anticipated growth. Thebalance sheet reveals a growth in the asset base of the business,which is critical for the accumulation of the capital that isessential for additional investments. The income statement depictsthat the firm is recording positive increment in the levels ofinventory and volume of sales, which have led to an increased profitmargin compared to what was obtained back in 2009. The operating cashflow for the year 2010 reveals an increasing trend from what wasobtained from 2009 thus signaling an increase. According to Graham etal. (2010), having reducing liabilities growth margin is essential inassessing the prosperity of a firm.

Question2:

Thefinancial statements that have been obtained for the two consecutivetrading periods (i.e 2009 and 2010) reveals that the firm is actuallymoving in the right direction since the operating cash has increased,cash flow from assets as well as that to the stockholders haveincreased. It has to be noted that cash flow to creditors has reducedthat implying that the firm is not obliged to subject much of itsincome to meeting debtors’ obligations. Brigham &amp Houston(2012) observed that a firm’s management has to move forward withthe idea of expanding their activities to cover new markets since thefinancial base of the company is quite strong and thus encouraging.Banks and other lenders can be convinced with the financial resultsposted by this firm thus facilitating the availability of the neededexpansion funds. Other stakeholders like shareholders can be urged toprovide additional capital since the returns on their investments aresufficient in that context (Ross et al., 2011).

References

Brigham,E. F., &amp Houston, J. F. (2012). Fundamentalsof financial management.Mason, Ohio: South-Western Cengage Learning.

Graham,J. R., Smart, S. B., &amp Megginson, W. L. (2010). Corporatefinance: [linking theory to what companies do].Mason, OH: South-Western Cengage Learning.

Ross,S. A., Westerfield, R., &amp Jordan, B. D. (2011). Essentialsof corporate finance.New York: McGraw-Hill Irwin.