The Company 1 has the least cash in change and the beginning cash. However, by the end of the same year, the ending cash had increased from $17275 to $97265. This is an extremely good and promising growth. Therefore, it can be stated that the company 1 has sustained the survival stage and is now on the path of the rapid growth stage. Company 1 also shows promising market prospect in coming years as they have a positive growth value. The health status of the company is also very stable and promising. Considering this, company 1 holds a better prospect of being an ideal choice amongst the three companies.
The Company 2 has good cash generated from operating activities, investing activities and financing activities. However, the company appears to be in loss as its ending cash had declined from $1403445 to $ 1289145. This shows that the company has probably crossed the expansion and market growth stage and is now at the maturity stage. Therefore, it is recommended that the company must make itself capable of dealing with challenges such as increased market competition, moving on to new markets, developing a sustainability plan and having an exit plan as well. The company 2, however, is not an ideal choice for the investment as it will be exposed to multiple challenges and threats in the current market.
Th company 3 has the best level of revenue generated from operating, investing and financial activities. Its Net change in cash is also of the greatest value of all three. Also, the company appears to be in a stable but matured stage as its ending cash has increased from $1639000 to $2080300. However, the difference between the beginning and ending cash is not much. Therefore, it can be stated that the company does has a stable position, but it can soon end up in maturity stage from where it will have to face more challenges to generate greater revenue.
Considering the cash flow statement of the three company, I would rank Company 1 as first, Company 3 as second and Company 2 as third. The reason is that the Company 1 is a budding company with potential to survive in market and generate greater revenues. The Company 3 is still in a stable position while the Company 2 is going in loss and probably facing more market challenges.
Dugan, M. T., Gup, B. E., & Samson, W. D. (1991). Teaching the statement of cash flows. Journal of Accounting Education, 9(1), 33-52.
Wallace, R. O., Choudhury, M. S., & Pendlebury, M. (1997). Cash flow statements: An international comparison of regulatory positions. The International Journal of Accounting, 32(1), 1-22.
If you have any queries please write to us
Join our mailing list