Cashflow statements Flashcards
1
Q
Formula: Cashgeneratedfromoperations
A
Profitbeforetax
+
Non-cashexpenses (deprecation, losses are expenses)
+
Changesinworkingcapital
Cashgeneratedfromoperations
2
Q
Increase in inventories mean…
A
We have spent money on inventory and should be a cash outflow
3
Q
Increase in payables mean…
A
Money has not been paid to suppliers yet, so we retained cash and is therefore a cash inflow.
4
Q
Increase in receivables mean…
A
More sales are on credit and therefore we are delaying receiving cash and therefore is a cash outflow.
5
Q
The 3 changes in working capital
A
Payables
Receivables
Inventories
ALWAYS ACCOUNT FOR ALL 3!!!!!
