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Google Inc. Cash Flows statements
Cash flow statement is one of the financial statements prepared by companies. It is used to reveal ways in which a company utilizes and the sources cash. Companies either use indirect or direct method in preparing the statement of cash flows (Davies & Crawford, 2011). Google Inc. uses the indirect method in the preparation of the cash flow statements. Indirect method involves an adjustment of the company’s net income figures. Google’s net income was adjusted for non-cash items included in the statement of comprehensive income. In addition, the net income was also adjusted for the net changes in the elements of the working capital.
Three primary activities drive the sources and uses of cash; Operating activities, investing activities and financing activities(Davies & Crawford, 2011). At the end of 2014, Google had no cash at hand. The company had a deficit of $118 Million. Over the past three fiscal years, an increasing trend on the cash sourced the amount provided by operating activities has been observed. The increase has been due to the rise in the net income adjusted for non-cash items of the income statements. In addition, the net rise in cash from changes in the working capital accounts has led to the growth of the cash sourced from operating activities.
The significant uses of cash by the investment activities in the year 2014 included real estate purchases, capital expenditure, which involved acquisitions of production equipment and data centers. Lower earnings received from the divestiture of Motorola business also contributed to the increase of the amount used in investments. However, the increase was offset by the net decrease in amounts used to purchase marketable securities. In 2014, the financing activities that provided cash included the decline in the net cash utilized in payments of debt. Financing activities used cash to pay more share-based awards. However, the increase was counter balanced by a decrease in the net cash used in the payment of the debt.