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C 214: Financial Management > Financial Statements Part 2: Statement of Cash Flows > Flashcards

Financial Statements Part 2: Statement of Cash Flows Flashcards

1
Q

This is the most honest of the financial statements

A

Statement of Cash Flows

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2
Q

This reveals the true health of the company

A

Statement of Cash Flows

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3
Q

CFO means

A

Cash flows from operations

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4
Q

CFI means

A

Cash Flows from Investing

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5
Q

CFF means

A

Cash Flows from Financing

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6
Q

The sum of CFO, CFI, and CFF is equal to

A

the company’s change in cash (ending cahs-beginning cash)

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7
Q

This includes what to produce, how to produce it, whom to sell it to, whom to use for suppliers, etc.

A

Operational Decisions

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8
Q

CFI measures the net cash impact of

A

Operating Decisions

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9
Q

What type of projects a firm decides to take

A

Investing Activities

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10
Q

Investing activities involve decisions concerning the purchase and sale of

A

Long-term assets, such as conveyor belts or the construction of new production facilities

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11
Q

CFI measures the net cash impact of

A

Investing Decisions

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12
Q

Deals with the issuance of debt and equity, the repayment of debts or repurchase of stock, and the payment of dividends

A

Financing Decisions

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13
Q

CFF measures the net cash impact of

A

Financing Decisions

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14
Q

The standard form for the statement of cash flows lists what?

A

Operating, investing, and financing cash flows (in that order) followed by the net change in cash

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15
Q

These will impact the way cash flows are categorized

A

The firm’s core activities

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16
Q

The most commonly used method used by financial analysts to calculate CFO is

A

Indirect Method

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17
Q

Financial statement accounts which generate operating expenses

A

Operating Accounts

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18
Q

Generally, current assets other than cash are

A

Operating Asset Accounts

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19
Q

Current liabilities other than notes payable are

A

Operating Liability Accounts

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20
Q

Increased assets =

A

Outflow of Cash

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21
Q

For assets to increase

A

Cash must be used to acquire the asset

22
Q

An increase in an asset account indicates what

A

That cash has left the firm

23
Q

Increases in liability accounts signal

A

an inflow of cash

24
Q

For the purposes of the statement of cash flows, current liabilities are considered a

A

Financing Account

25
Q

When calculating CFO, be sure to not adjust

A

net income for changes in notes payable

26
Q

This involves any cash in or out of the company due to investment in or disposal of fixed assets

A

Cash Flow from Investing

27
Q

An increase of an asset including cash or the decrease of a liability

A

Use of Cash

28
Q

CFF stands for

A

Cash Flow from Financing

29
Q

CFF is calculated by

A

comparing the appropriate balance sheet accounts

30
Q

An increase in a financing account signals

A

A cash inflow

31
Q

What happens to net income?

A

Pay dividends to equity holders OR Increase retained earnings

32
Q

Dividends =

A

(Old RE + Net Income) - New RE

33
Q

CFO =

A

Net Income + Depreciation expense, +/- change in operating assets, +/- Changes in operating liability accounts

34
Q

CFO cannot be distributed to the owners of a firm because

A

CFO does not allow for required reinvestment

35
Q

FCF stands for

A

Free Cash Flow

36
Q

FCF is

A

Distributable cash

37
Q

FCFF is

A

Free Cash Flow to the Firm

38
Q

FCFE is

A

Free Cash Flow to Equity

39
Q

FCFE is the cash distributable to the

A

equity holders after satisfying all obligations to debt holders

40
Q

The cash actually distributed to stockholders

A

Dividends

41
Q

The base equation for measuring FCFF is

A

FCFF = EBIT(1-tax rate)+Depreciation - CAPEX - Increases in NWC

42
Q

The percent of earnings a firm pays in tax

A

Tax rate

43
Q

Depreciation =

A

Depreciation Expense

44
Q

EBIT

A

Earnings before interest and taxes

45
Q

CAPEX

A

Capital Expenditure on PP&E; frequently measured as CFI

46
Q

NWC

A

Net working capital (current assets-current liabilities) changes

47
Q

How much the firm spends on fixed assets

A

Capital Expenditures

48
Q

Calculated by subtracting current liabilities from current assets

A

NWC

49
Q

New borrowings minus any repayment of old debt is

A

Increases in debt

50
Q
A

C 214: Financial Management (9 decks)

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