Financial Statements Part 2: Statement of Cash Flows Flashcards
This is the most honest of the financial statements
Statement of Cash Flows
This reveals the true health of the company
Statement of Cash Flows
CFO means
Cash flows from operations
CFI means
Cash Flows from Investing
CFF means
Cash Flows from Financing
The sum of CFO, CFI, and CFF is equal to
the company’s change in cash (ending cahs-beginning cash)
This includes what to produce, how to produce it, whom to sell it to, whom to use for suppliers, etc.
Operational Decisions
CFI measures the net cash impact of
Operating Decisions
What type of projects a firm decides to take
Investing Activities
Investing activities involve decisions concerning the purchase and sale of
Long-term assets, such as conveyor belts or the construction of new production facilities
CFI measures the net cash impact of
Investing Decisions
Deals with the issuance of debt and equity, the repayment of debts or repurchase of stock, and the payment of dividends
Financing Decisions
CFF measures the net cash impact of
Financing Decisions
The standard form for the statement of cash flows lists what?
Operating, investing, and financing cash flows (in that order) followed by the net change in cash
These will impact the way cash flows are categorized
The firm’s core activities
The most commonly used method used by financial analysts to calculate CFO is
Indirect Method
Financial statement accounts which generate operating expenses
Operating Accounts
Generally, current assets other than cash are
Operating Asset Accounts
Current liabilities other than notes payable are
Operating Liability Accounts
Increased assets =
Outflow of Cash
For assets to increase
Cash must be used to acquire the asset
An increase in an asset account indicates what
That cash has left the firm
Increases in liability accounts signal
an inflow of cash
For the purposes of the statement of cash flows, current liabilities are considered a
Financing Account
