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C213- Cashflow

Statement of cashflow

QuestionAnswer
There are three sections in the statement of cash flows 1. Operating 2. Investing 3. Financing
Statement of cashflow what is the most imprtant Operating
Operating. For purposes of preparing a cash flow statement, operating activities are those activities that enter into the calculation of net income. Net cash provided by operating activities is the "bottom line" of the cash flow statement.
Investing. The primary investing activities are the purchase and sale of land, buildings, and equipment.
Financing. Financing activities involve the receipt of cash from, and the repayment of cash to, owners and creditors.
Financial statement analysis is greatly enhanced when financial ratios are compared with Both past values and values for other firms in the same industry
External users of financial statements use financial statement analysis for Investing decisions
Which of the following statements best describes financial statement analysis? Financial statement analysis involves relationships and trends.
When analyzing financial statements, diagnosis is The identification of where a business has problems
Relationships between financial statement amounts are called Financial ratios
What is a common category in a statement of cash flows? Cash from investing activities
Which cash flow category would include "cash received from investors"? Cash from financing activities
Which item is an investing activity? Cash payments for purchase of plant assets
What impact does the sale of equipment have on the statement of cash flows? Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash flow? The indirect method is more popular among large U.S. companies
Assuming the company uses US GAAP standards, what is the total cash flow from financing activities? Calculate 1. Operating= day-to-day business (sales, wages, rent, interest, inventory) 2. Investing= long-term assets 3. Financing = debt + equity transactions
Operating activities ash flows from core business operations * Example: sales, inventory purchase, wages, rent, interest
investing activities ash flows from buying or selling long-term assets * Example: purchase of property & equipment
Financing activities cash flows involving **owners and lenders
The statement of cash flows summarizes a company's cash flows for a period of time
he statement of cash flows explains how a company's cash was generated during the period and how that cash was used.
The statement of cash flows, on the other hand, reports the period's transactions and events in terms of their impact on cash
It is important to note that the statement of cash flows does not include any transactions or accounts that are not already reflected in the balance sheet or the income statement
When forecasting the future, a cash flow statement is an excellent tool to analyze whether the operating, investing, and financing plans are consistent and workable
A pro forma cash flow statement is a prediction of what the actual cash flow statement will look like in future years if the operating, investing, and financing plans are implemented
The statement of cash flows replaces the none
The statement of cash flows Summarizes all cash inflows and outflows of an entity for a given period of time
Which of the following is NOT a purpose of the statement of cash flows? It measures the profitability of an entity.
Which of the following statements is NOT true? The statement of cash flows includes transactions that are not already reflected in the balance sheet and income statement.
. Cash equivalents are short-term highly liquid investments such as Treasury bills, commercial paper, and money market fund
In the statement of cash flows, cash receipts and payments are classified according to 3 main categories: Operating activities Investing activities Financing activities
Operating Activities. All transactions relating to a company's delivering or producing its goods for sale and providing its services are called operating activities
Cash inflows from operating activities also include the cash receipts from interest and dividend revenue.
The net amount of cash provided or used by operating activities is THE key figure in a statement of cash flows.
net cash from operations is the "bottom line" of the cash flow statement.
Investing Activities. Cash inflows and outflows from (1) acquiring and selling productive assets such as property, plant, and equipment, (2) acquiring and selling investment securities, and (3) lending money and collecting on those loans are called investing activities.
A cash flow statement is an important companion to the income statement.
Cash flows are partitioned into three categories operating, investing and financing.
Created by: mnapole
 

 



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