Alpha Beta Gamma Case

Gamma

1989 1990 1991

1 What are the firm's major sources of cash Issuance of treasury shares, including tax benefits(230,733)

* Net income is very high (Revenue earned is high) Issuance of treasury shares, including tax benefits(296,225) Issuance of treasury shares, including tax benefits(239,653)

The Major uses of cash * Purchase of plant, property and equipment (1223,038)

* Purchase of treasury shares (814,958) * Purchase of plant, property and equipment (1027,625)

* Purchase of treasury shares (270,231) * Purchase of plant, property and equipment (737,578)

* Purchase of treasury shares (240,719)

2 Was the cash flow operations greater than/ less than net income Cash flow is greater than Net income Cash flow is greater than Net income Cash flow is much greater than Net income

What are the major reasons for it * Included a lot of non cash expenses(depreciation & amortization) * Included a lot of non cash expenses(depreciation & amortization) * Included a lot of non cash expenses(depreciation & amortization)

3 Was the firm able to generate enough cash from operations to pay for all of its capital expenditures Yes Yes Yes

4 Did the cash flow from operations cover both the capital expenditure and the firms dividend Yes Yes Yes

5 If it did, how did the firm invest its excess of cash Used in finanacing activities The excess increases the cash balance The net cash flow from financing activity is negative

6 If not,what were the sources of cash the firm used to pay for capital expenditures and/or dividends NA NA NA

7 Were the working capital (CA & CL ) accounts other than cash and cash equivalents primarily sources of cash, and or users of cash Users of cash Sources of cash Sources of cash

8 What are the major items affected cash flow Payments to retire debt Decreases in taxes Purchase of kienzle business

9 Net Income 1072610 74393 -617427

10 Cash flow from Continuing operations 1479391 1434074 1040901

11 Capital Expenditures 1290662 1103114 -1026591

12 Dividends 0 0 0

13 Net borrowing -112820 -3235 -98177

14 Working Capital -360004 186690 60923

1) Increase in cash inflows is due to changes in working capital and Net income decreased over the years which is not a very good indication.

2) Positive cash inflows from operating are easily covering the cash outflows required for investing activities, which is a healthy sign.

3) Although profitability is not very high, the increase in capital expenditures shows that the firm in on an expansion stage.

Beta

1989 1990 1991

1 What are the firm's major sources of cash Cash received from customers(51,110) Cash received from customers(73,273) Cash received from customers(83,865)

The Major uses of cash * Cash paid to suppliers and employees (46,589)

* Capital expenditure (-3650) * Cash paid to suppliers and employees (77,820)

* Capital expenditure (-4,600) * Cash paid to suppliers and employees (77,820)

* Marketable securities purchase (-8000)

2 Was the cash flow operations greater than/ less than net income Cash flow is much greater than Net income Cash flow is greater than Net income Net income greater than operating cash flow

What are the major reasons for it Both adj to net income before working capital changes and changes in working capital are in the same sign(+). Which makes Cash flow from Operating expenses greater than net income * The changes in assests and liabilities are less negative reduces small amount of cash

* The adjustments are compariteively more positive. * The adjustments are positive.

* The changes in assests and liabilities are negative enough to cover for adjustments and decrease net income further.

3 Was the firm able to generate enough cash from operations to pay for all of its capital expenditures Yes Yes No

4 Did the cash flow from operations cover both the capital expenditure and the firms dividend Yes Yes No

5 If it did, how did the firm invest its excess of cash The excess cash exceeds by only $20,000. Net payments under working capital line of credit NA

6 If not,what were the sources of cash the firm used to pay for capital expenditures and/or dividends NA NA Cash from issuance of common stock

7 Were the working capital (CA & CL ) accounts other than cash and cash equivalents primarily sources of cash, and or users of cash Sources of cash Users of cash Users of cash

8 What are the major items affected cash flow Proceeds(payment) of subordinate debt No investment in Marketable securities Proceeds(payment) of subordinate debt