Essay on Cash Flow Analysis

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Section 4: A trend analysis over the last five years, seeking to identify significant trends such as differences in growth rates between sales revenues and accounts receivables balances, differences between growth in sales and growth in operating cash flows, etc.

Trend Analysis using 2008 as the base year:
Sales Revenue and Trade and Other receivables (current) 2008 2009 2010 2011 2012 2013 Sales Revenue ($,000) 343,532 354,587 291,091 465,829 382,010 332,947
Trade and other receivables ($,000) 49,679 36,545 40,489 74,730 53,538 54,054 Sales Revenue (2008 being 100%) 100% 103% 85% 136% 111% 97%
Trade and other receivables (2008 being 100%) 100% 74% 82% 150% 108% 109%

The trend analysis shows that the correlation between sales and receivables follow similar patterns after 2009. It could be forecasted revenue and receivables grow (decrease) would have similar trend.

Sales Revenue and Cash from Operating Activities: 2008 2009 2010 2011 2012 2013 Sales Revenue ($,000) 343,532 354,587 291,091 465,829 382,010 332,947
Net cash provided by operating activities 59,992 53,978 54,817 51,835 77,257 25,449 Sales Revenue (2008 being 100%) 100% 103% 85% 136% 111% 97%
Net cash provided by operating activities (2008 being 100%) 100% 90% 91% 86% 129% 42%

Sales and cash from operating activities had different patterns in 2011 and 2013, in 2011 cash receipts increased following the same pattern as revenue but also cash outflows increased similarly. In 2013 the sales revenue continued dropping however the cash from operating activities was reduced more significantly.

Revenue, Materials used, Sub-contract costs and Employee benefits. 2008 2009 2010 2011 2012 2013 Sales Revenue ($,000) 343,532 354,587 291,091 465,829 382,010 332,947
Materials Used ($,000) (161,539) (169,468) (122,413) (185,074) (112,598) (107,418)
Sub-contract costs ($,000) (28,471) (28,281) (21,583) (71,311) (73,939) (86,972)
Employee benefits ($,000) (62,927) (60,073) (49,732) (75,756) (71,193) (67,516) Sales Revenue (2008 being 100%) 100% 103% 85% 136% 111% 97%
Materials Used (2008 being 100%) 100% 105% 76% 115% 70% 66%
Sub-contract costs (2008 being 100%) 100% 99% 76% 250% 260% 305%
Employee benefits (2008 being 100%) 100% 95% 79% 120% 113% 107%

Expenses (materials used and employee benefits) had followed sales revenue changes patterns, however Sub-Contract Costs has relatively increase more than the Sales Revenue in 2011 and continue growing in 2012 and 2013 despite the decrease of sales revenue in those years. It could be assumed that some of increase on Sub-contract costs has contributed the increase on assets.

Sales Revenue, Profit and Sub-contract costs: 2008 2009 2010 2011 2012 2013 Sales Revenue ($,000) 343,532 354,587 291,091 465,829 382,010 332,947
Profit for the year ($,000) 345,540 356,596 293,101 467,840 384,022 334,960
Sub-contract costs ($,000) (28,471) (28,281) (21,583) (71,311) (73,939) (86,972) Sales Revenue (2008 being 100%) 100% 103% 85% 136% 111% 97%
Profit for the year (2008 being 100%) 100% 105% 113% 150% 156% 36%
Sub-contract costs (2008 being 100%) 100% 99% 76% 250% 260% 305%

Trends for Sales Revenue, Sub-contract costs and Profit shows minimum difference in pattern in 2009 and 2010, from 2011 Subcontract costs increases significantly despite the lower increase in the sales revenue resulting a lower increase in profit, in 2012 profit increased pattern was maintained with a significant decrease of sales revenue. In 2013 profit decreased significantly as a result of a consistent increase in Sub-contractor costs increase and sales
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