Kodak’s Cash Flows Essay
Cash flows are regarded as statements that play a great role in the process of revealing the capability of a company or corporation to successfully create and assign operational capital. The movement of cash flow within the company forms an important aspect in keeping the cash circulation process of the company in check while avoiding any eventualities that may occur within the company. The main focus of the essay involves the process of assessing Eastman Kodak’s capability in generating cash flows and its use through the use of the Kodak Annual Report (Kodak, 2008).
Significance of Cash Flow Statements
The risk of bankruptcy is high among companies without efficient cash flow management strategies. In this case, cash flow acts as an important instrument that assists in the assessment process of the capability to diffuse and produce the operational capital. According to Kodak Annual Report, the analysis of the cash flow indicated the transformation in terms of functional, financing and capitalizing activities within the period under review. Thus, the period between 2005 and 2007 there was an experience of loss as reflected in the cash flow statement. In this case various modifications were made in terms of devaluation and repayment, reorganization and deficiency duties together with intensification in receivables and accounts were recorded in the cash flow. Despite the losses recorded in the consecutive years from 2005 -2007 the cash flow statement indicated that Kodak’s operational accomplishments within the specific accounting period created sufficient cash for the purposes of covering the outflow thus a progressive completion balance being achieved at the close of each year (Kodak, 2008).
In addition, Kodak’s cash flow indicated that despite the losses made there was a progressive gain that was made. The cash flow statement indicated the major sources of the gain made as a result of the profits Kodak was able to obtain from the sale of the Health Group and HPA businesses. Furthermore, profits were also generated from Kodak’s financing activities. The losses incurred by Kodak Company were as a result of the long standing debts that the company was in the process of settling through payments and shareholder dividends. Thus the cash flow in relation to Kodak’s company was able to disclose the positive impact of the operating, investing and financing activities that were being carried out within the specific accounting periods. The gains or profits made by the company were mainly attributed to the investing activities rather than the functional and financing activities that were carried out within the accounting periods (Kodak, 2008).
The Kodak Company’s cash flow statement was an important tool in revealing both the upsurges and reductions that were experienced and the ways through which the company was able to exploit the working capital from the operating activities. In this case, the cash flow is an essential tool that assists in assessing the financial situation of Kodak Company and enables the company to make efficient decisions in relation to financial needs of the company. The cash flow will also help the company to gauge its capability to generate future cash flows and effectively meet their financial obligations. Thus, the findings of the report indicated that Kodak was successful in the process of assessing investing strategies for the purposes of obtaining considerable gains in terms of profits.
Kodak. (2008). Washington: Securities and Exchange Commission.