DB 7 Research Paper Example | Topics and Well Written Essays - 1000 words

DB 7 - Research Paper ExampleThe cash in feast is good news to creditors whose interest is in availability of cash from which the organization can fulfill its debts. The cash inflow from operating activities, especially nett profit, is also good news to the companys stockholders who are interested in the interest that they can earn from their shares because such rates depend of profitability (door guard and Norton, 2012). The management, as the organizations custodian, also delights in the positive cash flow as an indicator of their effectiveness and efficiency. The positive cash flow does not identify negative effects on the mailholders (Harrison, Horngren, 2008 Porter and Norton, 2010). RadioShacks main use of cash and implication on stakeholders The companys main cash application is in financing activities through leverage of treasury stocks. This means that the corporation re acquired its stock and this has important impacts on the management and stockholders. It offers benefi ts to stockholders because of the interest earned in selling their shares to the company. It however has the disadvantage of lost stake and shareholders reduced decision-making authority as the entity gains more decision-making authority. The purchase however increases the managements autonomy and new(prenominal) benefits to the organization such as ensuring a approbative market value for its stock, expanding its returns on investment, and protecting the organization from potential takeover. The management also gains the power to purchase other companies (Needles and Powers, 2012). Question 2 Most significant differences between net cash provided by operations and net income The most significant differences between net cash from cash flow statement and net income from the income statement are identified in adjustments for reconciling net income to the net cash. The most significant difference is with respect to accounts payable, accrued expenses, income taxes payable and other pay ables, whose substance value amount to $ 85 million. Another significant difference is realized through depreciation and amortization that account for a $ 84.2 million variation. Inventories and accounts and notes receivables are the other significant differences between the two cash values. Inventories accounted for a cash outflow of $ 60.4 million while accounts and notes receivables accounted for a reduction in net cash flow by $ 39.9 million (Stittle and Wearing, 2008). Question 3 Comparison of RadioShacks sales and purchase of fixed assets in 2010 relative to previous years The net assenting of fixed assets in the year 2010 is little that the net additions in the previous years. This means that the difference between purchase and sales during the accounting period was less than the difference in preceding periods. While there was a net increase in value of property, plant, and equipment by $ 80.1 million, the year ended 2009 realized a higher value increment of $ 80.8 millio n. The year ended 2008 realized higher net increment of $ 85.6 million, 5.5 million more than net fixed asset purchase for the year ended 2010. It is however important to note that the changes are not representative of pure purchase of sales of the fixed assets but a trade union interaction of the two (Stittle and Wear