Cash Flow Statement Flashcards

1
Q

Structure of Cash Flow Stement

A
  1. Cash from operations
  2. Cash from investing
  3. Cash from financing
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2
Q

Cash flows from operations

A

Net income Starting point (indirect method)
+ Depreciation & amortization –After net income, the second line is usually the addback of D&A, which is embedded in COGS and operating expenses on the I/S thus reducing net income
-Increases in working capital assets (i.e. A/R, inventory, prepaids, other current assets)
+ Increases in working capital liabilities (i.e. A/P, accrued expenses, other current liabilities)
+/-Other items
+ Impairments
-Gains on sale of assets
+ Stock based compensation
-Increases in deferred tax assets
+ Increases in deferred tax liabilities
= Cash flows from operations

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3
Q

Cash from investing (CFI)

A

Def: The CFI section tracks additions and reductions to fixed assets and investments during the year (primarily long-term assets):

Items:

  • Capital expenditures (cash outflow)
  • Purchases of intangible assets (cash outflow)
  • Asset sales (cash inflow)
  • Purchases and sales of investments (cash outflow/inflow)
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4
Q

Cash from financing(CFF)

A

Def: The CFF section tracks changes in the company’s sources of debt and equity financing (primarily liabilities and equity items)

Items:

  • Issuance / repayment of debt (cash inflow / outflow)
  • Common stock issued / repurchased (cash inflow / outflow)
  • Payment of common & preferred dividends (cash outflow)
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5
Q

CFS as magnyfying glass

A

CFS identifies the year-over-year change of every B/S line item that affects cash

  • CFO captures the impact oof retained earnings, current assets, and current liabilities (and D&A part of fixed assets)
  • CFI captures the impact of longt-term assets
  • CFF captures the impact of long term liabilities and equity
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