financial statement of a company and speculate on the specific type of activity which would be included in each

Please discuss and differentiate the main categories of a SOCF (Operations, Investment, and Financing.) Find a financial statement of a company and speculate on the specific type of activity which would be included in each.

 

Any statement of cash flow has 3 parts –

Operations activities include cash generated from sales or service those are part of net income.

Investing activities include cash activities related to noncurrent assets such as long term investments, purchasing land, equipment etc. Or cash generated from sale of any noncurrent assets. Any cash flow change caused by the result of purchase or sale of investment assets belong to investing activities ( Talliard, n.d)

Financing activities include noncurrent liability and owners’ equity. Noncurrent liability would include principle of long term debt, stock sale or repurchase or both, dividend payment etc.

 

 

 

Here is a financial statement of JCP from https://www.marketwatch.com/investing/stock/jcp/financials/cash-flow

Operating Activities          
Fiscal year is February-January. All values USD millions. 2013 2014 2015 2016 2017
 Net Income before Extraordinaries (985M) (1.39B) (717M) (513M) 1M
Depreciation, Depletion & Amortization 543M 601M 631M 616M 609M
Depreciation and Depletion
Amortization of Intangible Assets
Deferred Taxes & Investment Tax Credit (467M) (164M) 3M 9M
Deferred Taxes (467M) (164M) 3M 9M
Investment Tax Credit
Other Funds 151M (78M) (57M) 198M (62M)
Funds from Operations (758M) (1.03B) (140M) 301M 557M
Extraordinaries
Changes in Working Capital 748M (785M) 379M 139M (223M)
Receivables
Accounts Payable 140M (214M) 49M (72M) 52M
Other Assets/Liabilities (5M) 74M (1M) 19M 11M
 Net Operating Cash Flow (10M) (1.81B) 239M 440M 334M

 

Here are few items for JCP’s operation activities –

JCP got a 9 million tax credit in 20017 , The revenue generated from operations is 557 million

In the year 2017, JCP’s working capital dropped by 232 million and JCP go 52 million as account payable and 11 million from other asset/liabilities

So we can see that the operational activities section tells us how much the company has generated from core business. (Morningstar.com . n.d.)

 

 

Investing Activities          
  2013 2014 2015 2016 2017
 Capital Expenditures (810M) (951M) (252M) (320M) (427M)
Capital Expenditures (Fixed Assets) (810M) (951M) (252M) (320M) (427M)
Capital Expenditures (Other Assets)
Net Assets from Acquisitions (9M)
Sale of Fixed Assets & Businesses 19M 105M 24M 98M
Purchase/Sale of Investments 5M 13M
Purchase of Investments
Sale/Maturity of Investments 5M 13M
Other Uses
Other Sources 526M 143M
 Net Investing Cash Flow (293M) (789M) (142M) (296M) (316M)

 

The investing activities section of the statement of cash flow for JCP tells us that JCP has spent 427 million in capital expenses. JCP has sold fixed asset worth 98 million in 2017 and the have sold another investment worth 13 million.

 

 

Financing Activities          
  2013 2014 2015 2016 2017
Cash Dividends Paid – Total (86M)
Common Dividends (86M)
Preferred Dividends
Change in Capital Stock 71M 793M 2M
Repurchase of Common & Preferred Stk.
Sale of Common & Preferred Stock 71M 793M 2M
Proceeds from Stock Options 786M
Other Proceeds from Sale of Stock 71M 7M 2M
Issuance/Reduction of Debt, Net (254M) 2.4B (260M) (557M) (23M)
Change in Current Debt 650M (650M) 667M
Change in Long-Term Debt (254M) 1.75B 390M (557M) (690M)
Issuance of Long-Term Debt (4M) 2.15B 828M (4M) 2.36B
Reduction in Long-Term Debt (250M) (395M) (438M) (553M) (3.05B)
Other Funds (5M) (9M) (34M) (5M) (10M)
Other Uses (17M) (9M) (34M) (5M) (10M)
Other Sources 12M
 Net Financing Cash Flow (274M) 3.19B (294M) (562M) (31M)
Exchange Rate Effect
Miscellaneous Funds 0
Net Change in Cash (577M) 585M (197M) (418M) (13M)
 Free Cash Flow (820M) (2.77B) (13M) 120M (93M)

 

In the financing activity section of cash flow statement we can see JCP has sold 2 million worth in common stock, taken new debt worth 23 million. Paid of 667 million worth current debt. JCp got 2.36 billions worth long term debt in 2017and paid back 3.05 billion in long term debt.

 

Reference

Taillard, M.  (n.d.). INVESTING ACTIVITIES CASH FLOWS.              Retrieved From

 http://www.dummies.com/business/accounting/investing-activities-cash-flows/

Retrieved on 3/3/2017. Retrieved from http://news.morningstar.com/classroom2/course.asp?docId=145092&page=3

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