A compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items;

Question 1

Items on CF statement (2 sources)

Answer 1

1. IS items

2. Changes in BS accts

Question 2

CFO

Answer 2

Inflows and outflows of cash from ‘transactions that affect a firms NI’

Question 3

CFI

Answer 3

Inflows and outflows of cash via aquisition or disposal of long term assets or certain investments

*Aquis. of debt n equity inv has int. and div which is rep. as op (the r and div)

Question 4

CFF

Answer 4

Inflows and outflows of cash resulting from ‘transactions affecting a firm’s “capital structure”’

Question 5

Capital structure: a firm finances its overall operations and growth by using different sources of funds.

Answer 5

Mix of LTDebt, STDebt, Common Equity, Preferred Equity

Cap. Struct refers to Debt-to-equity ratio: How risky a company is. More leverage more risk.

Question 6

CFO inflows

Answer 6

Cash collected from customers

Interst and dividends recieved

sale proceeds from trading securities

Question 7

CFO outflows

Answer 7

Cash paid to employees and suppliers

Cash paid for other expenses

Acquisition of trading securities

Interest paid

Taxes paid

Question 8

CFI inflows

Answer 8

Sale proceeds from fixed assets

Sale proceeds from debt and equity investments

Principal received from loans made to others

Question 9

CFI Outflows

Answer 9

Acquisition of fixed assets

Acquisition of debt and equity investments (r and div payments go to CFO)

Loans made to others

Question 10

CFF inflows

Answer 10

Principal amounts of debt issued

PRoceeds from issuing stock

Question 11

CFF outflows

Answer 11

Principal paid on debt

Payments to reacquire stock

Dividends paid to shareholders

Question 12

Div’s received and paid under GAAP

Answer 12

Op CF’s and Fin CF’s

received(CFO), paid(CFF)