Trend Analysis (In millions except trends) years Trend % 2016 2015 2014 2013 201
ID: 2599916 • Letter: T
Question
Trend Analysis
(In millions except trends)
years
Trend %
2016
2015
2014
2013
2016
2015
2014
2013
Net Income
6,527
7,351
7,098
8,584
65%
74%
71%
100%
Operation Activities
8,796
10,528
10,615
10,542
88%
105%
106%
100%
Investing Activities
-999
6186
7506
-4214
-10%
62%
75%
100%
Financial Activities
-6545
-5113
-3631
-3745
-66%
-51%
-36%
100%
Compare trends in cash flow from operations with the trends in net income. What conclusions can you draw from this? Do trends in cash flows from investing and financing activities provide any clues about company’s strategy? . Be specific.
years
Trend %
2016
2015
2014
2013
2016
2015
2014
2013
Net Income
6,527
7,351
7,098
8,584
65%
74%
71%
100%
Operation Activities
8,796
10,528
10,615
10,542
88%
105%
106%
100%
Investing Activities
-999
6186
7506
-4214
-10%
62%
75%
100%
Financial Activities
-6545
-5113
-3631
-3745
-66%
-51%
-36%
100%
Explanation / Answer
Company have regular payments in finance activities which implies that company do not have profitable investment opprtunities available with them to use surplus funds generated by business. So, they are paying off either loan, equity or dividend.
The above fact is corroborated by drop in revenue in year 2016 which shows that company sale is going down due to no new investment being made by them to augment plant capacity or install new modern plant to increase efficiency.
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