Cash flow from operating activities
Cash flows from operations entail the cash coming to the business at a specified period. Ideally, it is the total of all operating incomes and other non-cash items like depreciation. The addition of non-cash items stems from the reduction of the accounting profits by non-cash items. Cash flow from operations indicates the viability of the firm’s current business plan and operations. Cash flows from operations improve the solvency status of a company.
Notably, net cash flow from operations decreased for the financial year ending 2017 but increased in 2018. The reason for the decrease in 2017 is the huge amount paid to the suppliers, for income tax and IPO transaction costs. Payment to suppliers consumed a huge percentage compared to 2016. There was improved performance in 2018 since the cash flows from operating activities increased from 156.9 to 169.7 million dollars. Additionally, there were no IPO transaction costs for the period.
Investing activities
Investing activities in a cash flow statement mainly entails cash outflow for long term projects. Besides, it incorporates inflows from the sale of assets, securities, and business. Accordingly, the Shaver Shop cash flow statement contains investing activities.
In 2016, the company invested in purchasing PPE and acquiring corporate stores, which entailed cash outflow. There was no cash inflow from investment activities. Similarly, the company invested PPE and acquiring corporate stores in 2017 with less capital outlay compared to 2016. A similar trend was also adopted in 2018.
Financing
Cash flow from financing activities entails cash outflow to the company’s investors. Moreover, it involves cash inflows from various securities like bonds and stock. The majority of financing activities are outflows. Notably, the company experienced a decrease in the cash flows financing activities in 2017 relative to 2016 because of the issue of more shares in 2016. There were no shares issued in 2017. On the contrary, cash flows from financing decreased in 2018 because of payment for buy-backs and dividends.
Assessment of any other relevant information
The outbreak of covid-19 across the globe has affected every sector ranging from political, social, economic, financial structure, and religion around the world. Some of the world’s major economic giants are on the brim of collapse due to the effects of the pandemic. Besides, approximately all the stock exchange markets have been pounded, and oil prices have been witnessed. According to some experts like Kristalina Georgieva, who is the managing director of the International Monetary Fund(IMF), the condition could worsen. Additionally, covid-19 is destroying the world’s economy because the world has never fully recovered from the impacts of the second world war. Similarly, Shaver Shop is also affected like many other players not only in the consumer products industries but in all sectors.
For instance, the lockdown has influenced the movement of people, which makes it impossible for clients to move into stores to make purchases. Similarly, the online platform is also not functional with a lockdown because no deliveries are happening at the moment. The employees of various stores are also unable to work during this time, implying that the company sales have drastically reduced. The disease is dangerous and has caused havoc in all areas. Several deaths experienced have also changed people’s priorities, where they currently focus on basic needs more than anything else.
Summary and conclusion
Shaver Shop limited is an Australian and New Zealand company that ventures in the distribution of male and female personal grooming products. An analysis of the company’s ratios has demonstrated the financial health of the company. For instance, an evaluation of the firm’s asset turnover shows sound performance because the benchmark ratios are inferior to the actual ratios of the company. The company has also been experiencing increased sales for the three years under review, meaning that it has proper management and effective strategies. The financial statements for the period under review also depict an increase in sales. For instance, the asset turnover ratio for 2016 is 1.49, implying that Shaver Shop is generating 1.49 for every one dollar invested. Additionally, the cash flow statement depicts a healthy company. Despite the covid-19 pandemic, this is a stable and profitable company that is worth investing in its shares.