ABC Inc. is one of the largest global apparel companies in the world. It manages a diversified brand portfolio. ABC Inc. designs and markets branded dress shirts, neckwear, sportswear (casual apparel), jeans wear, performance apparel, intimate apparel, underwear, swimwear, swim products, handbags, accessories, footwear and other related products. Its brands are positioned to sell globally at various price points and in multiple channels of distribution, including company owned branded designer stores and big box retailers, like Walmart and Costco. This enables it to offer products to a broad range of consumers, while minimizing competition among its brands and reducing its reliance on any one demographic group, product category, price point, distribution channel or region.

ABC Inc. has evolved from its 1923 roots to become a diversified global company through a combination of strategic acquisitions. It has acquired several businesses and will continue to explore strategic acquisitions of businesses, trademarks and companies that it believes are additive to its overall business.

Attached are the financial statements for ABC Inc.s 2020 and 2019 fiscal years. The economy has been very stable over the past years, with inflation at 2%.

Required:

1. Has the change resulted in increased shareholder value? In your response consider what shareholders consider most important (maximum first 5 points-only the first 5 points will be marked) and evaluate each? Provide full reasoning and support, referenced to the financial statements and/or applicable ratios.
2. Cash has decreasing significantly from 2019 to 2020. State the reasons that cash has decreased. Provide full reasoning and support, referenced to the financial statements and/or applicable ratios.

ABC Inc. Balance Sheet As at January 31, 2020 and 2019 (in $ millions) 2020 2019 $ Assets Current Assets Cash Accounts receivable Inventories Prepaid expenses 143 $ 1,554 2,424 160 4,281 1,758 5,809 11,848 452 778 1,732 69 3,031 985 7,240 11,256 Property, plant and equipment Goodwill and intangible assets Total Assets $ Liabilities Current Liabilities Short-term liabilities Accounts payable Accrued liabilities Current portion of long-term debt 1,137 450 427 2,014 4,838 6,852 924 957 13 1,894 3,702 5,596 Long-term debt Total Liabilities Share holders' Equity Common shares Retained earnings 1,985 3,011 4,996 1,985 3,675 5,660 11,256 Total Liabilities and Shareholders' Equity 11,848 ABC Inc. Statement of Operations For the Year Ended January 31, 2020 and 2019 (in $ millions) 2020 2019 $ Revenues Cost of sales 9,909 $ 5,321 4,588 9,657 4,349 5,308 Gross Profit 3,168 520 Selling, general and administrative expenses Research and development costs Goodwill impairment charges Operating Income 2,785 150 1,431 222 1,620 Interest expense Net Income Before Income Taxes 551 (329) 166 1,454 Income tax expense (recoverable) (115) 509 Net Income (214) 945 ABC Inc. Statement of Cash Flows For the Year Ended January 31, 2020 and 2019 (in $ millions) 2020 2019 (214) 945 335 324 1,431 (1.853) (312) (784) 496 Cash Flows From Operating Activities Net earnings Adjustments to reconcile net income to operating cash flows: Depreciation and amortization of intangible assets Goodwill impairment charges Operating assets and liabilities Net cash provided (used) by operating activities Cash Flows From Investing Activities Capital expenditures Net cash used in Investing Activities Cash Flows From Financing Activities Issuance of debt, net of repayments Dividends paid Net cash used in Investing Activities Net increase (decrease) in cash Cash and short-term investments - beginning of period Cash and short term investments - end of period (1,097) (1,097) (396) (396) (142) 1,550 (450) 1,100 (309) 452 143 (142) (42) 494 452 ABC Inc. Balance Sheet As at January 31, 2020 and 2019 (in $ millions) 2020 2019 $ Assets Current Assets Cash Accounts receivable Inventories Prepaid expenses 143 $ 1,554 2,424 160 4,281 1,758 5,809 11,848 452 778 1,732 69 3,031 985 7,240 11,256 Property, plant and equipment Goodwill and intangible assets Total Assets $ Liabilities Current Liabilities Short-term liabilities Accounts payable Accrued liabilities Current portion of long-term debt 1,137 450 427 2,014 4,838 6,852 924 957 13 1,894 3,702 5,596 Long-term debt Total Liabilities Share holders' Equity Common shares Retained earnings 1,985 3,011 4,996 1,985 3,675 5,660 11,256 Total Liabilities and Shareholders' Equity 11,848 ABC Inc. Statement of Operations For the Year Ended January 31, 2020 and 2019 (in $ millions) 2020 2019 $ Revenues Cost of sales 9,909 $ 5,321 4,588 9,657 4,349 5,308 Gross Profit 3,168 520 Selling, general and administrative expenses Research and development costs Goodwill impairment charges Operating Income 2,785 150 1,431 222 1,620 Interest expense Net Income Before Income Taxes 551 (329) 166 1,454 Income tax expense (recoverable) (115) 509 Net Income (214) 945 ABC Inc. Statement of Cash Flows For the Year Ended January 31, 2020 and 2019 (in $ millions) 2020 2019 (214) 945 335 324 1,431 (1.853) (312) (784) 496 Cash Flows From Operating Activities Net earnings Adjustments to reconcile net income to operating cash flows: Depreciation and amortization of intangible assets Goodwill impairment charges Operating assets and liabilities Net cash provided (used) by operating activities Cash Flows From Investing Activities Capital expenditures Net cash used in Investing Activities Cash Flows From Financing Activities Issuance of debt, net of repayments Dividends paid Net cash used in Investing Activities Net increase (decrease) in cash Cash and short-term investments - beginning of period Cash and short term investments - end of period (1,097) (1,097) (396) (396) (142) 1,550 (450) 1,100 (309) 452 143 (142) (42) 494 452