Chapter #9 Flashcards
parts of a cash flows statement
operating activities investing activities financing activities changing cash supplemental data
when is the statement of cash flows the most important financial statement
evaluating company´s performance and health
what is the most important part of statement of cash flows
operating activities
what is included in operating activities
income
statement items
depreciations
what is included in investing activities
changes in investments and long-term assets
what is included in financing activities
changes in long-term liabilities and stockholder´s equity items
what is supplemental data
significant non-cash investing and financing activities
what is included in changes in investments and long-term assets of investing activities
cash inflows - sale of PP and E, sale of ivestments in debt, collection of principle on loan
cash outflows - purchase of PP and E, purchase investments in debt, make loans to other entitiies
what is included in changes in long-tem liabilities and stockholder´s equity in financing activities
cash inflows - sale from common- and preferred stock, issuance of debt
cash outflows - stockholders´ dividends, redeem long-term debt or reaquire capital stock (treasury)
what methods can be used to prepare operating activities
direct method
indirect method
what is included on the direct method
cash collection from sale to customers of inventory
cash received as interest on notes receivable
cash used to purchase inventory
cash used to pay salaries and wages
what does free cash flow describe
cash remeining from operations after adjustment of capital expenditures and dividends
equation for free cash flow
free cahs flow = net cash provided by operating activities - capital expenditures - cash dividends
