Statement of Cash Flow Flashcards
what is the difference between cash and cash equivalents
Cash = in bank account with instant access
Cash equivalents = short term, highly liquid investments that are readily convertible to cash
what is statement of cash flow useful?
it indicates liquidity and solvency
it summarises cash inflow and outflow
what workings need to be done in S/ cash flow?
working for operating activities: interest/tax paid, and NCA (depreciation/amortisation, gain/loss of sale, purchase of PPE, proceeds from issue of shares/dividends)
what are the difference b/w operating, investing, and financing activities?
Operating activities: day to day trading
Investing activities: buying/selling PPE
Financing activities: shares/dividends/borrowings
Each are totalled to give net inflow/outflow
what is the indirect method for calculating operating activities?
Profit before tax
add depreciation
add impairment
add finance cost
Loss/ (profit) on sale of NCA
(Increase)/decrease in inventories
(increase)/decrease in TR
Increase/ (decrease) in TP
= cash generated from operations
(tax paid)
(interest paid)
= net cash
