SCF

Question 1

Definition of Cash from operating activities

Answer 1

Transactions related to providing goods and services to customers and to paying expenses related to generating revenue

Question 2

Examples of cash inflows and cash outflows for Operating Activities

Answer 2

Cash inflows

1. Collections from customers
2. Receipts of interest and dividends on investment (this IS included here. Why? They appear on the I.S. and FASB req’s comparability btw IS and SCF)

Cash outflows

1. payments to suppliers
2. payments to employees
3. payments of interest and tax
4. other operating disbursements

Question 3

Which income statement items are EXCLUDED from Operating cashflows

Answer 3

1. Depreciation and amortization (and other noncash items)

2. gains or losses on disposal of PPE

Question 4

Definition of cash from investing activities

Answer 4

Transactions related to acquisition or disposal of long-term assets

Question 5

Examples of cash inflows and outflows for investing activities

Answer 5

Cash inflows
Divestitures of businesses
Sale of PPE and intangibles
Sale of investments

Cash outflows
Acquistiion of biz
acquisition of PPE and intangibles
acquisition of investments

Question 6

Definition of financing activities

Answer 6

Transactions related to owners or creditors (except for interest payments)

Question 7

Example of financing cashflows

Answer 7

Cash inflows
Issue of new stock
Reissue treasury stock
Borrow money

Cash outflows
Payment of dividends
Purchase treasury stock
Payment of principal on debt