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    Cash Flows at Warf Computers - Group 5 v.28.09

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    Zero Mustaf
    Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer. Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The VK even suggests alternative phrasing and sentence structure, and it provides detailed stylistic diagnostics.

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    Cash Flows at Warf Computers - Group 5 v.28.09

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    Zero Mustaf
    204 views8 pages
    Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer. Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The VK even suggests alternative phrasing and sentence structure, and it provides detailed stylistic diagnostics.

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    Cash Flows At Warf Computers_Group 5 v.28.09

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    Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer. Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The VK even suggests alternative phrasing and sentence structure, and it provides detailed stylistic diagnostics.

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    Download as pptx, pdf, or txt
    204 views8 pages

    Cash Flows at Warf Computers - Group 5 v.28.09

    Uploaded by

    Zero Mustaf
    Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer. Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated artificial intelligence algorithms that allow the user to speak naturally and have the computer input the text, correct spelling and grammatical errors, and format the document according to preset user guidelines. The VK even suggests alternative phrasing and sentence structure, and it provides detailed stylistic diagnostics.

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    Cash Flows

    at Warf Computers
    Group 5

    MUHYUDI BROTO WASESO ANINDYKA L E M VICTOR GUNAWAN


    Background

     Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer.

     Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated artificial
    intelligence algorithms that allow the user to speak naturally and have the computer input the text,
    correct spelling and grammatical errors, and format the document according to preset user guidelines.
    The VK even suggests alternative phrasing and sentence structure, and it provides detailed stylistic
    diagnostics.

     To introduce the VK, the company will require significant outside investment. Nick has made the
    decision to seek this outside financing in the form of new equity investments and bank loans.
    Balance Sheet and Income Statement
    Financial Cash Flows Remarks
    Financial Statement of 2015
    Cash Flow Earnings Before Interest and Tax
    Depreciation
    2.080.000
    248.000
    Calculating Operating Cash Flow
    Current portion of Taxes - 605.000
    Operating Cash Flow 1.723.000

    Ending Net Fixed Asset 3.601.000


    Beginning Net Fixed Asset - 2.796.000
    Calculating Net Capital Spending
    Depreciation 248.000
    Net Capital Spending 1.053.000

    Changes in Net Working Capital


    Ending NWC 1.135.000
    Changes in NWC = 'Ending NWC- Beginning NWC
    Beginning NWC 914.000
    Changes in NWC 221.000

    Operating Cash Flow 1.723.000


    Change in NWC - 221.000
    Free Cash Flows or Cash Flows From Asset
    Net Capital Spending - 1.053.000
    Cash Flow from Assets 449.000

    Net New Borrowing (LTD) - 31.000


    LTD = Ending long term Debt - Beginning long term
    Paid Interest 137.000
    Debt
    Cash Flow to Creditors 106.000

    Dividend Paid 292.000


    Equity Raised -
    Surplus Raised - 15.000 Cash Flow to Stakeholder
    Treasury Stock Raised 66.000
    Cash Flow to Stakeholders 343.000
    Cash Flow to Investor 449.000 Cash Flow Creditors + Cash Flow to Stakeholders
    Checkpoint
    Cash Flow From Asset = Cash Flow to Investor
    Accounting Statement Cash in the Beginning, 2014 391.000
    of Cash Flow A. Operating Activity 2015 2014
    Net Income 1.167.000
    Plus : Depreciation 248.000
    : Deferred Taxes 171.000

    Add : Increase in A/P 519.000 485.000 34.000


    : Decrease in Inventory 641.000 663.000 22.000

    Less: Increse in other Current Asset 92.000 78.000 - 14.000


    Increase in Account Receivable 716.000 668.000 - 48.000
    Decrease in other current liabilities 247.000 401.000 - 154.000
    New Cash Flow from Operating Income 1.426.000

    B. Investing Activity
    Sale of Fixed Assets 429.000
    Purchase of Fixed Assset - 1.482.000
    Net Cash Flow from Investment - 1.053.000

    C. Financing Activity
    Equity Repurchased - 66.000
    Equity Sold 15.000
    Debt Raised 228.000
    Debt Retired - 197.000
    Devidends Paid - 292.000
    Net Cash Flow from Financing Activity - 312.000

    Net Cash Flow 61.000


    Cash in the Ending, 2015 452.000
    Question
    1. How would you describe Warf Computers’ cash flows?
    According to Warf Computer’s Cash Flows :
    a. It is having inflows from operating activities on the other hand outflows from
    financing activities
    b. But overall there is cash inflow in the Firm which shows a good cash generating
    ability of Warf Computers
    c. So, Financial Investors can consider investing in this firm because its cash flows
    are positive and there is low risk of bankruptcy

    2. Which cash flow statement more accurately describes the cash flows at the company?
     From investment point of view, accounting cash flow more accurately describes cash
    flow at the company as:
     it shows the investors each activity and the cash generation from activities
    separately
     all expense and revenues to the year , investments and financial position is shown
    through this statements
     investors can take decision at a glance by seeing the statement that whether they
    should invest or not
    Question
    3. In light of your previous answers, comment on Nick’s expansion plans.
     Nick expansion plan is favorable because:
     even by raising amount of debt, increasing equity and investing in fixed assets it
    have a positive cash flow according to  accounting cash flow statements
     The firm has positive financial cash flow and distributes a significant amount to
    investors. The firm can make a better use by retaining the cash for the expansion.
    THANK YOU
    CORPORATE FINANCE
    SWISS GERMAN UNIVERSITY

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