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Accounting Discussion Post
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Accounting Discussion Post
For the year ended Feb 28, 2023, there are various items in the operating activities for the cash flow statement that are used to reconcile the earnings of the company. The items with the highest amount for the reconciliation of the net earnings are depreciation and amortization. The amount of depreciation and amortization was $765,263. By reconciling, depreciation expense is added back to the net income because it is classified as a non-cash charge, which decreases net income but has no effect on cash flow. Hence, it increases the net earnings and functions as a necessary variable in the adjustment process.
Fiscal Year Ended February 2023
Net Cash Provided by Operating Activities: ($2,898,617)
Net Income: ($5,680,778)
In this year, the company created more net cash from operating activities than it had net income.
Fiscal Year Ended February 2022
Net Cash Provided by Operating Activities: $2,211,442
Net Income: ($341,697)
In that year, it also had net cash from operating activities greater than net income.
Fiscal Year Ended February 2021
Net Cash Provided by Operating Activities: ($26,362)
Net Income: ($899,777)
In that year, the company earned more net cash from operating activities than net income.
Therefore, in the Financial years ending February 2023 and February 2022, the company produced more net cash from operating activities than net profit, and in FYE February 2021, it produced more net income than net cash from operating activities.
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The context and the company's goals must be taken into account when setting goals to assess success. Sustainable profit is mostly equivalent to making money and keeping the cash flow stable. Despite reporting losses in 2020, 2021, and 2022, the company still could generate a significant positive cash flow from operating activities in 2022 and 2023. Therefore, the company is most successful in terms of the fiscal years ended February 2022 and February 2023 as it managed to generate large positive cash flow from operating activities despite posting net losses.