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    Acct 602-Discussion 4

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    Michael Lipphardt
    The document discusses the importance of cash flow statements for analyzing a company's financial health and liquidity. It provides an overview of Apple's 2021 cash flow statement, noting a significant increase in operating cash flow due to higher net income and changes in accounts payable. It also discusses decreases in cash from investing and financing activities, such as stock repurchases, but that Apple still had a positive cash position at the end of 2021.

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    Acct 602-Discussion 4

    Uploaded by

    Michael Lipphardt
    15 views2 pages
    The document discusses the importance of cash flow statements for analyzing a company's financial health and liquidity. It provides an overview of Apple's 2021 cash flow statement, noting a significant increase in operating cash flow due to higher net income and changes in accounts payable. It also discusses decreases in cash from investing and financing activities, such as stock repurchases, but that Apple still had a positive cash position at the end of 2021.

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    USI Acct 602

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    The document discusses the importance of cash flow statements for analyzing a company's financial health and liquidity. It provides an overview of Apple's 2021 cash flow statement, noting a significant increase in operating cash flow due to higher net income and changes in accounts payable. It also discusses decreases in cash from investing and financing activities, such as stock repurchases, but that Apple still had a positive cash position at the end of 2021.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views2 pages

    Acct 602-Discussion 4

    Uploaded by

    Michael Lipphardt
    The document discusses the importance of cash flow statements for analyzing a company's financial health and liquidity. It provides an overview of Apple's 2021 cash flow statement, noting a significant increase in operating cash flow due to higher net income and changes in accounts payable. It also discusses decreases in cash from investing and financing activities, such as stock repurchases, but that Apple still had a positive cash position at the end of 2021.

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    © All Rights Reserved
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    of 2

    The statement of cash flows is important for analysis because it summarizes the amount of cash and

    cash equivalents entering and leaving a company (Murphy, 2022). In other words, a cash flow statement

    shows the activities that are generating cash for the company, inflows, and where cash is being spent, or

    outflows. It breaks down the performance of an organization between operating, investing, and financing

    activities which can help various users in analysis (Fraser & Ormiston, 2016). For example, a cash flow

    statement can be used by creditors because they can check cash sales and receipts from accounts

    receivables to know the timing of their payments and determine whether future credit might be granted to

    the company in the near future or not. Cash flow statements are also useful to investors as it reveals the

    true cash position of the company so that they can make judgements about their returns. Overall, the cash

    flow statement provides information about the liquidity of the business and the availability of cash to

    meet obligations and helps define the financial health of the business.

    The publicly traded company I used for this analysis was Apple, Inc. The most recent cash flow

    statement can be found on the 10-K for Apple, Inc. on Page 33. This was filed on Sept. 25, 2021 and is

    linked below:
    https://www.sec.gov/ix?doc=/Archives/edgar/data/320193/000032019321000105/aapl-20210925.htm

    Apple’s cash flow statement shows a significant amount of cash generated from operating activities in

    2021 at $104,038,000,000. Most noticeably in this this section, we see an increase in net income which

    jumped 64.9% from 2020. This is very good news for Apple as it indicates high profitability since its

    revenue is far exceeding its expenses. In this section, it is also worth noticing that changes in accounts

    payable resulted in $12,326,000,000 in working capital compared to the -$4,062,000,000 the previous

    year. Higher accounts payable means Apple is buying more things are credit which is why we see

    positive cash flow. This compares to accounts receivables which is at -$10,125,000,000 in 2021

    compared to $6,917,000,000 in 2020. Overall, we see a 28.9% increase in operating activity cash flow

    from the previous year which is a good sign. Most significantly in the investing activities section, we see

    that the proceeds from marketable securities, which is cash flow positive, decrease by nearly

    $10,000,000,000 from the previous year. We also see payments for acquisition of property, plant, and

    equipment, which is cash flow negative, increase by nearly $4,000,000,000 from 2019. This is why
    overall; we see the outflow of cash used in investing activities change by about 239% from 2020 to 2021.

    Finally, in the financing section we see decrease in cash due primarily to the repurchase of common

    stock, which resulted in negative cash flow of roughly $13,000,000,000. We also see a slight increase in

    payments of dividends to shareholders which was $14,467,000,000—roughly 2.7% higher than 2020.

    Overall, despite outflows in cash flow as a result of investing and financing activities, Apple still saw a

    positive ending cash position of $35,929,000,000 which indicates strong organizational health.

    References

    Apple, Inc. (2021, September 25). United State Securities and Exchange Commission, Form 10-
    K, Retrieved February, 2022 from
    https://www.sec.gov/ix?doc=/Archives/edgar/data/320193/000032019321000105/aapl-
    20210925.htm

    Fraser, L. M., & Ormiston, A. (2016). Understanding financial statements. Pearson.

    Murphy, C. B. (2022, February 8). Understanding the cash flow statement. Investopedia.
    Retrieved February 8, 2022, from https://www.investopedia.com/investing/what-is-a-cash-
    flow-statement/

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