Cash Flow Analysis

Instructions for the paper


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You should use APA (American Psychological Association) guidelines for formatting the title page (make sure you give your paper a meaningful title like “Financial Analysis of XYZ company”), references, in-text citations and subheads.

Your paper should be at least 6 to 8 pages long, plus a title page and a list of references.

You should use MS Word format, double-spacing,1 inch margins all the way around, page numbers on every page except for the title page and 12 point Times New Roman font.

Correct spelling, grammar and punctuation are expected.  You are also expected to write formally at a collegiate level.

Research guidelines:

Go to  The company isis AFL also known as Aflac


On the bottom left hand corner of the company’s page on Yahoo Finance is a section called “Financials”.  There should be three links — Income Statement, Balance Sheet and Cash Flow.  If the company you picked does not have one of those or does not have three years’ worth of data for each of those, then pick another company.

You should have at least two sources other than the textbooks in the class.  These sources can be websites, newspaper or journal articles or books.  Don’t forget to cite the source of your financials (Yahoo Finance or otherwise).  You may use any legitimate source (i.e. National Enquirer is not acceptable but NY Times is).


Writing guidelines:

Throughout the term, you have submitted portions of the final project and received feedback from your instructor.  Before you use those sections for the final paper, review the feedback carefully and edit the sections to incorporate the feedback before you use them in your final paper.  Your paper should have the following sections using the subheads indicated below. Each section should be at least 1 page:

Introduction: In this section, introduce the company you have selected and include basic background information about the size and type of company, locations and products.

Income Statement Analysis: In this section, answer the following for the trend analysis: What is the total revenue, total costs of revenue and net income for each year? How have these numbers changed over the three years and what could be some reasons why these numbers have changed the way they have? In addition, pick at least one appropriate (for this statement) ratio or financial in addition to what is provided and calculate that and explain it.  See the section on ratio analysis below for ideas.

Balance Sheet Analysis: In this section, answer the following for the trend analysis: What are the total assets, liabilities and shareholder equity for each year? How have these numbers changed over the three years and what could be some reasons why these numbers have changed the way they have? In addition, pick at least one appropriate (for this statement) ratio or financial in addition to what is provided and calculate that and explain it.  See the section on ratio analysis below for ideas.

Cash Flow Analysis: In this section, answer the following for the trend analysis: What are the total cash flows from operating, investing and financing activities as well as the change in in cash and cash equivalents for each year? How have these numbers changed over the three years and what could be some reasons why these numbers have changed the way they have? In addition, pick at least one appropriate (for this statement) ratio or financial in addition to what is provided and calculate that and explain it.  See the section on ratio analysis below for ideas.

Conclusion: In this section, answer the following: What are the most important things you have discovered in your analysis?  What are some conclusions you reached? What are the highlights of your paper?

Ratio Analysis: In addition to the trend analysis above, it is customary to also analyze ratios.  Some commonly used ratios are:


Profit Margin = Net Income/Sales (Represents how much of each dollar in sales remains after all costs are covered)

Return on Equity = Net income/Total equity (Represents the return for all holders of equity in that company)

EBIT Return on Assets = EBIT/Total assets (Represents the pre-tax return on the total net investment in the firm from operations or alternatively, how efficiently management has used assets)

Debt-equity ratio = Total debt/Total equity (Represents the long term solvency or financial leverage in that company)

This is what I have used in my paper so far so please use these same ratio.











Have you heard of the slogan, “We help cover what health insurance doesn’t so you can focus on recovery? (About Aflac / Our Company, n.d.).” Just in case the slogan did not help, what about the duck logo with his funny tone of voice. Here is another hint; it brings significant competition to Major insurances Fine; it is called Aflac. “Aflac has been around for six decades, located in Columbus, GA (About Aflac / Our Company, n.d.).”

They have been here helping many individuals with supplement insurance coverage, which Major insurance does not cover. They are also located in Japan. With over 50 million individuals combined in the U.S and Japan believing and counting on their support to assist their families. Major insurance only covers medical bills. However, when life is struck with unexpected difficulties, we still have bills accumulating. Well, this is where Aflac comes in if you have been affected by unforeseen circumstances like critical illness, short-term disability, hospital, dental, accident, and life insurance, they provide you with cash. With the cash provided, you may pay anything you like, for example, childcare, car payments, and utility.

Aflac stands for American Family Life Insurance. It was founded on November 17, 1955, by John Amos and his two brothers. They only started with Life Insurance, then cancer policies, and so forth. On June 14, 1974, they were introduced to the New York Stock Exchange, opening with $7.25 per share. Also, Aflac Duck was introduced to the world on January 1, 2000, bring awareness to Aflac. “Overall, Aflac has been a commitment to providing them with the confidence of millions of people (About Aflac / Our Company, n.d.).” Knowing they have assistance in being prepared for whatever life may bring (About Aflac / Our Company, n.d.).”


Introduction feedback-Christie, a great introduction! Please label this section Introduction. Please include the company headquarters, and as this is a financial analysis, referencing its Market Capitalization or Total Revenues would give the reader an idea of the size of the company.

Income Analysis

The total revenue from 2017 to 2019 has increased at a growing rate. This increase of revenue is good for the company as it shows that the company has the potential to grow. From the year 2017 to 2018, revenue increased by by 0.41%. From 2018 to 2019, revenue increased by 2.46%.From the year 2017 to 2018, total expense increased by by (17,706,000-17,582,000)/17,582,000 = 0.705% .From 2018 to 2019, total expense increased by (17,778,000 – 17,706,000)/ 17,706,000 = 0.406%.As this business grows, their expenses are growing at a lower rate than the rate that their revenue is increasing. This proves that the business is very efficient. As the business grows, they are able to benefit from economy of scale, as the business grows, they are able to conduct business at a lower price. Net Income for the year 2017 is $4.6 million, this number decreased in 2018 as the company profited only $2.9 million. In 2019, the net income for the company is $3.3 million. The significant decrease in net income contributes directly to the company’s tax provision. In 2017, the company didn’t pay tax and it had a rebate of $586,000. However, in 2018 and 2019, the company paid more than $1 million each year for their taxes. The ROA ratio has not changed over the past 3 years, as the company consistently has a ROA ratio of around 0.031. Aflac for their profit, from 2018 to 2019, profit margin increased, this number represents that for every dollar of revenue that the company makes, the net profit of $1 of revenue is $0.149 in 2019.


Cash Flow Analysis Feedback- same feedback as Balance sheet.

Balance Sheet

In Aflac’s corporation, the trends that I was analyzing are positives in the business from the years of 2017,2018, and 2019. This section will break down the trends such as total assets, liabilities, and shareholder’s Equity for each year. Which will explain why specific trends are taking place. When evaluating the total assets for Aflac from 2017 to 2019, assets are increasing. This is a positive factor that indicates that the Aflac corporation is growing as it is buying more assets to conduct business. When taking a look into their liabilities from the years of 2017 to 2019, the liabilities increase, with the assets as the corporation is borrowing more money to buy more assets to conduct business.
From 2017 thru 2019, shareholders’ Equity increases over time, as this is an indication that more money is being invested in the corporation.  After analyzing the balance sheet, it is concluded that the major contributing factor to the increase in assets would be an investment as in 2017, total investments were $120,168,000, and in 2019, this number increased to $133,195,000. From 2017 to 2019, there’s also an increase in the account “Cash and Cash Equivalents” from 2017; the account’s balance was $3,491,000, and in 2019 the account had $4,896,000 in cash and cash equivalents.

Throughout the two years, asset class with somewhat of an increase would be “deferred policy acquisition costs” and “other assets.” Liabilities increased more than $10,000,000 over the two years as this increase is mainly explained by the increase in “policyholder liabilities” and “Accrued Expenses.” In 2019, for every dollar of Equity that the company has, it generated $0.114 dollars in income; this number (ROE) has decreased over the year. Every dollar of asset that the company has, it is generating less revenue. The debt-to-equity ratio has decreased from 2017 to 2019; even though the ratio has decreased over the year, it is still a high ratio as the company is taking in more than four times the debt to the amount of Equity they have. As an investor, this number might look concerning because it has so much debt obligations to pay within a year.

Balance sheet- Feedback

Christie, either use a table or state the figures for the 3 line items to guide the reader. Please add actual business details to your explanations about the trend you observed, don’t speculate. Your commentary was conjecture. You can get this information by looking at the income statement commentary in the actual annual reports or in any analyst reports to support your analysis. You can google this or use or the PBSC or public library resources. You need to use in-text citations whenever you reference any financial facts or data to indicate where you retrieved them.


Cash Flow Analysis

AFLAC has had impressive cash flows though there has been a notable decline over the last three years. Cash flow from operating activities was $6.12 billion in 2017, decreasing further to $6.014 billion in 2018. 2019 saw a more considerable decline in cash from operating activities to $5.455 billion. There was an outflow of cash for investing activities with cash flow being $5.432 billion, $3.582 billion, and $3.171 billion in 2017, 2018, and 2019. Similarly, there was a cash outflow about financial activities.  AFLAC cash and cash equivalents for the three years show an increase. In 2017, cash on hand was $3.491 billion. This increased by 24.23% in 2018 to $4.337 billion. There was a further increase of the same in 2019 by 12.89% to $4.896 billion. This suggests a strong cash position. The last three years have seen an increase in cash from operating activities accompanied by a decreased cash outflow for investing activities. This could be one of the many reasons why the company has an increase in cash and cash equivalents (“AFL | AFLAC Inc. Financial Statements – WSJ”, 2020). A look at some of the company’s ratios can give us an added glimpse of its financial health. As of December 2017, the company’s current ratio stood at 0.04, rising to 0.05 in 2018 and remaining that way as of December 2019. As of June 2020, the current ratio was at 0.06. This means that the company is not able to cover its current liabilities using the existing assets it has. The company has a favorable return on assets ratio. A trend analysis of the three years shows that the company is in a position to manage its assets in the generation of income effectively. As of December 2017, the company’s ROA was 3.04%. It dropped to 2.06% in December 2018 and 2.16 in December 2019. This is a positive outlook for the company, and it means AFLAC is in a position to turn revenue from the assets in its possession (“Yahoo is now a part of Verizon Media”, 2020)

Cash Flow Feedback


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