Vonage Holdings Company Case Study

Vonage Holdings Corporation has been in operation since 2002, however, has not made a gain in profit but has had losses that equal around a billion dollars (Edmonds, Tsay, & Olds, 2011). The net income for 2006 was at a loss of -$338,573 and its net cash flow from operating activities also reported a loss of -$188,000 (Edmonds, Tsay, & Olds, 2011). The net income for 2007 was at a loss of -$267,428 and its net cash flow from operating activities also report a loss of $270,926 (Edmonds, Tsay, & Olds, 2011). The net income for 2008 was at a loss of -$64,576 and its net cash flow from operating activities had a $655 in the green (Edmonds, Tsay, & Olds, 2011).

While looking at the statements of cash flow Vonage has reported a net income loss
Based on the statement of cash flow the net income loss has improved from the loss of -$338,573 to a loss of -$64,576 which is an improvement by -$273,997. Just because they are still in a loss does not mean they are not making strides to improve it has shown above (Edmonds, Tsay, & Olds, 2011). This has been made possible by the improvement of the operating activities within the company. The net cash flow from the operating activities has improved greatly from having a loss in 2006 and 2007 to have a gain in 2008. Even though the gain of $655 in 2008 was not larger, it was better than the continuing loss from 2006 and 2007. One can conclude the expenditure was covered by the arrival of cash to give an improvement which is needed for the existence of the company. In 2006 the net cash flows from investing activities were in the loss of -$210,798 and by 2008 they were in the green by $40,486 (Edmonds, Tsay, & Olds, 2011). The cash flow from financing activities does not look as well in 2008 as it had in 2006. In 2006 the company had cash and cash equivalent of $210,253 which is a lot more than the $46,134 in 2008. The difference in the amounts from 2006 to 2008 is the fact in 2006 the company made larger purchases in investing to which is shown in 2006. However, the company by 2008 has had a decrease in the financing activity but is showing improvements toward the right direction in
Vonage paid around $250 million in debt with cash that was obtained and useable to the company. When comparing the cash and cash equivalent from the prior year, 2008 was significantly lower. In 2008 the issuance of debt had grown by a substantial about unlike the absence in 2007 and small about in 2006. One can conclude that the amount of debt was paid off due to the new debt amounts the company has obtained. Thus, this means the company borrowed money that their cash flow would not cover to pay off other debtors.