Cash Flow Statement Analysis

A. Analyze the 3 sections of the cash flow statements as well as overall.

Perform an analysis on the 3 sections of the cash flow statement for all 3 companies and submit the cash flows and a written analysis.

Chevron is main company, andConoco Phhilips, Exxon Mobil are competitor companies.

Example is attached.

This should be 4~5 pages.(Written report/ analysis)

V. Cash Flow Analysis Through the years 2010 to 2012, Wal-Mart has trended a positive increase in their cash flow activities. Wal-Mart's cash from operating activities had a decrease of 9.93% in 2011 and a slight increase of 2.59% in 2012. The major source for operating activities was net income. In 2012, Wal-Mart's consolidated net income was $16,387 (amount in millions), $16,993 in 2011 and $14,883 in 2010. After adding loss income from discontinued operations net of income taxes, Wal-Mart's income from continuing operation increase of 6.66% in 2011 and 3.10% in 2012. Their inventories from 2010 to 2011 reported -244.83%, however, increased 16.29% in 2012. Increase in income, depreciation and amortization, deferred income taxes, inventories, etc. led net cash provided by operating activities to increase in 2012. Wal-Mart had a percent change of 4.93% in 2011 and 36.22% in 2012 from investing activities. Net cash used in investing activities was $16,609 in 2012 compared to 2011 were they reported $12,193. The major reason for change was payments for property and equipment, and investments and business acquisitions net of cash acquired from investing activities. Payments for property and equipment had increase 4.23% in 2011 and 6.39% for the following year. Investments and business acquisitions were zero in 2010. However, it reported large increase from 2011 to 2012 change of 1656.44%. Although other investing activities made negative decrease from the three years, their net cash used in investing activities increased because almost every investing activity made positive increase. From Wal-Mart's financing activities, they had a percentage change in 2011 of -15.24% compared to in 2012 of -29.68%. Wal-Mart's cash used in financing activities was $14,191 in 2010, $12,028 in 2011 and $8,458 in 2012. Decrease in cash in 2011 was primarily because net change in short-term borrowings and payments of long-term debt. For 2012, it is primarily because of proceeds from issuance of long-term debt and purchase of company stock. Since proceeds from issuance of long-term debt and purchase of company stock increased a lot from 2010 to 2011 compared to 2012, the percentage change of financing activities decreased more in 2012 than 2011. Only dividends paid activity increased for the three years with 5.22% increase in 2011 and 13.77% increase in 2012. The net change in cash and cash equivalents has a percentage change of -181.01% in 2011 and 65.04% in 2012. Wal-Mart's cash and cash equivalents at beginning of year was 8.69% change from 2010 to 2011 compared to negative 6.48% change from 2011 to 2012. Wal-Mart did not make profits over the years, because their cash and cash equivalents at end of year made negative both in 2011 and 2012. It means company's financial position was poor. Since Wal-Mart did a great job with operating and investing activities, they should more concern on financing activities. Target has had a positive net change the past few years. They show an increase in their net income between the years of 2010 to 2012. When compared to Wal-Mart, Target shows to have more of a positive net income change than its major competitor. Although WalMart's net income in greater than Target, Target net income has increased over the past few years, unlike Wal-Mart. In 2012, Target increased its cost of goods sold by 5.66%. The increase in the cost of goods sold can be viewed positively. Target has also had an increase in their operating income as well. They could have been higher in 2012 but they had a negative amount on other operating expenses. They did decrease in memberships and other income over the past 3 years. In 2010, they had the highest amount and it declined in 2011 and then again in 2012. This is due to people not getting credit cards. Wal-Mart had a greater amount in membership and other income when compared to Target. Overall, Target has been stable as a company from the years 2010 to 2012. Based on the numbers, Target shows to be improving over the years and would be a good company to invest in. Through analyzing the statement of cash flows for Costco Wholesale Corporation, we can see a variety of changes. First of all, comparing consolidated net income for the past three years shows that there has been a steady increase from 2010 to 2012. In 2010, they reported $1,323 million, $1,543 million in 2011, and $1,767 million in 2012. For analysis purposes, all figures will be in the amounts of millions of dollars. From 2010 to 2011, this income increased 16.63% and also increased 14.52% from 2011 to 2012. Net Cash from operating activities went up 15.04% from 2010 to 2011. From 2010 to 2012, these figures were noted as $2,780, $3,198, and $3,057, respectively. As far as depreciation and amortization, there was a bigger change from 2011 to 2012 than from 2010 to 2011. In the latest years, a significant 12.80% increase plays a role. Within the operating activities, deferred taxes have been on the rise over the years. From 2010 to 2011, there was an 1100% rise and inclined again from 2011 to 2012 by 103.57 %. This fluctuation in deferred taxes has impacted several accounts. Furthermore, inventories are a contributing factor for some of these variations. For instance, there was a 200% increase from 2010 to 2011, however in 2011-2012; it went down by almost 24%. Also, accounts payable have gone up from 2010 to 2011, but went down about 10% from 2011 to 2012. If accounts payable are decreasing, we can assume that other activities are being paid off such as bonds. Within the investing section of Costco's statement of cash flows, payments for property and equipment have consistently declined. This can be due to the fact that proceeds from disposal of property and equipment increased 300% in the years 2010 to 2011. Also, business acquisitions and investments have really gone up. Is this why long term debt really increased from 2011 to 2012? Most likely this is the effect of these activities, as we can see that investments went up about 38% from 2010 to 2011 and 100% in the latest years. The finance section has some very important information worth examining. First of all, as mentioned earlier, payments of long term debt decreased by an astonishing 100% in the first two years of operation. With Common Stock purchases increasing, along with purchases of redeemable non-controlling interest, dividends payable are rising as well. This contributing factor is a good sign for this company. Conclusively, this has impacted cash and cash equivalents, in which we see, this has increased from 2010 to 2012