Analysis of Cash Flow Statements of Bank of America and Wachovia
The company has seen an increase in its cash on hand from 2003 to 2005, with a slight increase (seven percent) from 2003 to 2004 and a more significant increase (28 percent) from 2004 to 2005. Most of this increase came from financing, which enjoyed increases of 155 percent from 2003 to 2004, and 29 percent from 2004 to 2005. However, these gains were offset by investing activities, which declined precipitously (by 75 percent in 2003 to 2004 and by 20 percent from 2004 to 2005). Continued losses in this area could prove problematic to the organization in the long-run ("Bank of America," 2006).Specifically, cash from financing activities increased to more than $171 billion in 2005. Most of this increase came from increases in federal funds purchased and securities sold under agreements to repurchase. This category increased from $12.9 billion in 2003 to more than $120 billion in 2005. Retirement of long-term debt, generally a positive move by institutions, has required a substantial amount of cash: $9.2 billion in 2003 increasing to $16.9 billion in 2004 and then falling back slightly to $15.1 billion in 2005. Net increases in deposits is an interesting part of the company's financing activities since, wh
7 billion in 2004 and increasing to $134. 3 percent, which by itself is not cause for concern. In 2003, the company had net cash used of $5. Wachovia has increased its spending on purchasing securities in 2004 and in 2005 to more than $101 billion in 2005. 6 billion in 2004 and a net outflow of $8. The company's provision for credit losses (a net cash inflow) has increased substantially from $2. Cash from financing activities has fallen from $36. Accrued expenses and other liabilities have also fallen from 2003, when a positive cash flow of nearly $13 billion was realized to an inflow of $4. The company's cash on hand fell slightly from 2003 to 2005, by 2. At the same time, the company continues to spend ever-increasing amounts on loan origination, moving from $2. 6 billion in 2003, $13 billion in 2004 and nearly $19 billion in 2005. Wachovia has seen strong increases in deposits, but it has also issued a large amount $10.
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