Candela Corporation Case
Crystal S. Fitzwilliam
Axia College of University of Phoenix
Candela Corporation Inc for all July 3rd 2004, June 28th 2003 and June 2002 cash flow statement shows the breakdown of the company inflow and out flow for the 3 years. The operating activities show the net income and net loss for the 3 years. The investing shows the purchases made in 2002, 2003 and 2004. Lastly the activity of the financing for the company shows the increase and decrease of the long-term commitments in the company.
In 2002 the Candela Corporation had a cash flow from operations of 7,071,000. The cash flow shows that being greater than the net loss of 2,154,000. The net loss was due mostly to the increases of the accounts receivable of 3,525,000 and inventories of 1,661,000. There was a decrease in the account payables of 3,069,000. The purchase of new plant assets, ...view middle of the document...
The warranty costs, the payable and other assets decreased but at a smaller margin within the company. The working capital adjustment resulted in a gross outflow of cash which caused the cash outflow in the form of the operating activities. The investing activity shows the only item and that was the purchase of fixed assets which caused and outflow in terms of the investing activities. In the financing activities the overall which brought under control means of share issue and borrowing modest debt, but due to the corporation commitments the company had to buy back stocks and also repay its existing debt. The company decision caused another outflow of cash in financing activities. The results of operating, investing and financing activities were negative which caused a net cash outflow for the company.
In 2003 the cash flow from operations was at 11,655,000, this is an increase from the net income of 6,814,000. The adjustment for items like the loss from discontinued operations of 1,013,000 and increase in liabilities such as the accrued payroll and income tax payable. The cash flow from operations and the issues of the common stock, which is what was used to purchase of the new plant assets, repay of long-term debt, borrowing and to the increase the cash balance.
In 2004 the cash flow from operations was 1,132,000 is much lower than the net income of 8,119,000. The increase of the account receivables of 7,663,000 and the increase in other current assets totaling 2,550,000, and the decrease in the income tax payable of 1,312,000. The cash flow from operations and from issue of common stock went to purchasing new plant assets and continues to increase the cash flow balances.
The information used from the statement of cash flow shows the depreciation and loss from the discontinued operations, all the information in the cash flow statement cannot be obtained directly from the balance sheet or the income statement. In order to consider both the balance sheet and income statement you would have to only consider things such as the increase in account receivables as being directly available from the balance sheet.
Chapter 4 (statement of cash flow) pages 117-148