- 20 Marks
CR – Nov 2021 – L3 – Q5 – Analysis and Interpretation of Financial Statements
Produce a report analyzing the cash flow performance of Saglema Plc relative to a competitor over two years and explain the uses and limitations of cash flow analysis.
Question
You are the Senior Financial Accountant at Saglema Plc (Saglema), a company that manufactures and sells painting materials in the local market and around the West African sub-region. At the first one-on-one meeting with the recently appointed chairperson of your company’s governing board, she asked you to produce a concise report on Saglema’s cash flow performance relative to that of Adidome Plc (Adidome), a close competitor, over the last two years.
The following are the cash flow statements for the last two years for Saglema and Adidome:
Cash Flow Statements for the Year Ended 31 August 2020 (together with comparatives):
Required:
i) Produce a report showing the comparative analysis of the cash flow performance and situation of Saglema over the last two years, relative to that of Adidome. (15 marks)
ii) Explain TWO (2) uses and THREE (3) limitations of such analysis. (5 marks)
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