Mini Case Study: Cash Flow at Warf Computers, Inc.

Accounting Cash Flow

Warf Computers Statement of Cash Flows
Cash Flows from Operating Activities
in ‘000
Net income $             896
Add Depreciation $             191
Add Deferred Taxes $             130
Changes in Assets
A/c Rec: $            (37)
Inventories $               17
A/c Pay: $               20
Accrued Expenses $          (118)
Others $            (11)
Total Cash Flows from Operating Activities $        1,088
Cash Flows from Investing Activities
Fixed Assets $       (1,140)
Sales of Assets $             330
Total Cash Flows from Investing Activities $         (810)
Cash Flows from Financing Activities
Long Term Debt (LTD) $          (151)
New Loan $             175
Note Payables $                 6
Dividends $          (225)
Stock Repurchase $            (48)
Stock Issue $               12
Total Cash Flows from Financing Activities $         (231)
Change in Cash $             47

Financial Cash Flows


Financial Cash Flows
Earnings Before Interest and Tax $ 1,598
Depreciation $ 191
Current portion of Taxes $ (467)
Operating Cash Flow $ 1,322
Fixed Assets variations $ 619
Depreciation $ 190
Net Capital Spending $ (809)
Current Assets variations $ 78
Current Liabilities variations $ 92
Cash Flow from Assets $ 170)
Net New Borrowing (LTD) $ 24
Paid Interest $ 105
Cash Flow to Creditors $ (81)
$ 262
Notes to Financial Statement
New Long Term Debt (LTD) $ 175
Retired portion of LTD $ -151
Net borrowing   $ 24
Stock Sold $ 12
New purchase of Stock $ -48
Equity Raised   $ -36
Fixed Assets Sold $ 330
Fixed Assets Purchased $ -1140
Change in Fixed Assets   $ -810

1. An increase in cash is highlighted in the annual cash flow statement. Reinvestment in the business and cash access provides expansion opportunities for the company. New investors will be attracted to the business because dividends are paid out. Compared to previous years, the business has generated an increased amount of cash and this represents the current cash flow in the company. For 2012, the cash flow was $262,000 which is highlighted in the financial cash flow section.

2. Both types of cash flow, accounting and financial, are equally important to the business. Positive results within the cash flow statements suggest the business’s finances are managed very well (Lee & Parker, 2013). More accurate results are detailed in the financial statements of cash flow. The company’s real cash flow positions are highlighted in the results. The degree of cash flow can be used in order to service long-term debt and financing costs, and this can be seen in the financial statement of cash flow.

3. The plan and decision of expansion within the company are appropriate and will allow the company to be profitable. Cash inflows are also appropriate and positive in this situation. Income and capital are also expanding, as highlighted in the income statements and balance sheets. In terms of revenues, the company is growing and the business also proves to have an appropriate amount of capital in order to increase borrowed funds to further expand the company. Business resources are utilized appropriately, and company management is proving beneficial in terms of future expansion.


  • Jury, T. (2012). Cash Flow Analysis and Forecasting: The Definitive Guide to Understanding and Using Published Cash Flow Data. Hoboken: John Wiley & Sons.
  • Lee, T. A., & Parker, R. H. (2013). Towards a Theory and Practice of Cash Flow Accounting (RLE Accounting). London: Routledge.
  • Lütolf-Carroll, C., & Pirnes, A. (2009). From Innovation to Cash Flows: Value Creation by Structuring High Technology Alliances. Hoboken: John Wiley & Son

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