CLASS 6 (NO CLASS 5) (HANDOUT STATEMENT OF CASH PENTICTON COMPANY P2-19 (PAGE 84) * when we analyze a statmenet of cash * there are three are four things to look at * this templates are a set of comparaisons * net income and cash flow of operations is the first thing to look at * gain on sale increases our net income at the end of the day * depreciation vs asset purcahses tells us whether the company is shrinking or growing * depreciation is the systemiatic allowcation of a cost of an item of its experected peridio of use- wwe uy an asset and we depreciate it when we use it up * gives us an estimate of how much asset base we are using up each eash year * asset purcahses- how we are replensishing our captiaal asset ina particiualr year. Asks “what is happening to our company- in terms of its capital stock” * if depreciation of a period of time constistantly exceeded asset purchases, we can conclude that the companies assets are declining.
(3) investing and financiang activities- how did company finance investments?
4)- ususally we think didividens are paid out of net income- companies make money and therefore are able to pay dividends. Divdnedsa re a percentage of net income. Companies have to make money in order to pay didvdned. The “but is that we have to have money in order to pay divdends. * Divdends are paid through cash flows of operations * This compasriosn focuses our attention on the dividends strgety. * What is the reason that companies py didvdends and what is the different sort of strgeties for them to pay dividends. * Clienteles- different companies have different clienteles * Lets say we are looking at Bell. Bell prides itself on having a dividend stream. Who are the clienteles for a clientele like a bank like bell. Risk adverse people do this. They want to know who