Cash Flow Essay

552 words - 3 pages

CONCEPTS
a. The statement of cash flows details the actual cash generated through a specific time period, usually for fiscal year ending 20XX, for example. The cash flow statement, specifically, identifies the actual cash flowing in and out of the company and reveals how a company spends its money. Conversely, the income statement is based on the accrual method of accounting and will contain revenue, for example, that has not been received or expenses that have not yet been paid.

b. The two separate methods to prepare the statement of cash flows is the direct and indirect method. Weis Markets uses the indirect method of accounting due to the fact the company uses the accrual method of accounting and derives data from both the balance sheet and income statement. Most companies, public companies specifically, use the indirect method of accounting ...view middle of the document...

e. Cash equivalents are current, highly liquid assets that can include U.S. government Treasury bills, bank certificates of deposit, banker’s acceptances, or other money market instruments.

f. Net income does relate to a company’s actual cash flow. Since net income is derived from the accrual basis of accounting, net income and non-cash items, such as depreciation, depletion, and amortization, is added back to net income to obtain actual cash flow.

PROCESS
g.

ANALYSIS
h. The Company’s net cash flow from operating activities shows a net positive cash flow for the consecutive three years for 2005, 2006, and 2007, although it decreased slightly in 2007. The decrease in the net cash from investing activities from 2006 to 2007 indicates the Company invested less in PP&E and marketable securities than prior year 2006. The Company’s net cash from financing activities remained consistent for years 2005, 2006, and 2007. The activities in the Company’s financing section are constant and predictable in the three year comparison.

i. Free cash flow measures a Company’s operating cash flow available less fixed asset additions to maintain current productive capacity. The cash flow from operating activities for Weis Markets was $85,097 in 2007. The statement of cash flows indicated the cash invested in PP&E was $64,233. See below for the three year comparison.
| 2007 | 2006 | 2005 |
Cash flow from operating | 85,097 | 99,842 | 104,402 |
Investments in fixed assets | 64,233 | 99,975 | 55,468 |
Free cash flow | 20,864 | (133) | 48,934 |

Weis Markets generates enough free cash flow to maintain current productive capacity aside for the small decrease in 2006.
j. Weis Markets anticipates further growth and with positive free cash flow in 2007, the Company can fund capital expenditures internally without generating debt and ultimately, generate consistent and actual income from within.

Other Papers Like Cash Flow

Cash Flow Essay

3708 words - 15 pages The Statement of Cash Flows Purpose of a statement of cash flows: To provide information about the cash inflows and outflows of an entity during a period. To summarize the operating, investing, and financing activities of the business. The cash flow statement helps users to assess a company’s liquidity, financial flexibility, operating capabilities, and risk. The statement of cash flows is useful because it

Cash Flow Essay

1732 words - 7 pages 1. Explain why investors should use the statement of cash flows. Cash flow is one of the most important measurements used by investors in valuing a company. You will hear the term used in the context of understanding how much a company is really growing (or not) after accounting conventions are stripped out of the income statement. Cash flow measures the amount of cash that a company brings in and uses during the course of an accounting

Cash Flow

917 words - 4 pages ASSIGNMENT #2 Application of Cash flow formulae [problems 1-5], Depreciation [problems 6-8] and Break-even Analysis [problems 9-10] Total Marks: 100 Problem #1 [5] What amount would you need to pay each January 1 into a savings account if at the end of 15 years (15 payments) you desire RM 30,000? Annual interest is 7%. (Note: The last payment will coincide with the time of RM RM 30,000 balance.) Problem #2 [5] A future amount, F, is

Cash Flow - 387 words

387 words - 2 pages . - Examine documents in support of purchases and sales of investment securities. - Obtain a client representation letter. - Verify the calculation equity method income.   d. Audit Procedures that should be undertaken about classification; -Study written records of investment strategies. - Review instructions to portfolio managers. -Study the company’s cash flow forecasts. -Determine the company’s financial position, working capital

Cash Flow - 555 words

555 words - 3 pages Cash Flow Worksheet (In OMR) Date 31/12/2013 Income Gross Income Salary #1 Salary #2 Bowring 18,980 32,500 8,204 19,864 37,882 20,000 8,408 9,000 95,154 20,056 36,180 9,251 12,000 77,487 20,979 37,692 9,645 12,000 80,316 21,968 44,820 10,019 12,000 88,807 Annual 2013 Annual 2014 Annual 2015 Annual 2016 Annual 2017 Bounces Investments Other Total Income 59,684 Expenses Debt Annual Mortgage debt payment Personal

Cash Flow - 1960 words

1960 words - 8 pages , (chapter 4 Accounting for merchandising Business) Kieso Weygandt Warfiel (2010), Intermediate Accounting, thirteenth edition, (chapter 10 Acquisition and disposition of property, plant and equipment) James Jiambalvo (2008), Managerial Accounting, third edition, (chapter 5 Balance Sheet and Statement of Cash Flows) CFO Free Cash Flow Scorecard.”CFO Magazine, 1 de enero 2005. Jill Krutick, Fortune, 30 de marzo de 1998, p. 106. Web sites: http

Cash Flow Statement

934 words - 4 pages Week 5 Individual Paper Cash Flow Statement Sancy Acevedo University of Phoenix ACC 421 November 13, 2010 Financial Statements is prepared to help the stakeholders like investors, lenders, and management so that they can evaluate the performance of the organization. . Cash flow statement is one of the main financial statements. It provides information regarding cash inflows and outflows of the organization. Moreover they further show

Cash Flow Statement

746 words - 3 pages How to analyze a cash flow statement Once you have constructed a cash flow statement, you will be much closer to understanding the financial position of your company. While a balance sheet and income statement are tools for management, without a cash flow statement they are limited barometers and may even be misleading. Operating Activities The cash flow statement will tell you where money came from and how it was used. When analyzing cash

Digi's Cash Flow Statement

1170 words - 5 pages Identify the format of Statement of Cash Flow use by the business (Direct or Indirect) for three consecutive years; the major cash inflow and cash outflow for the three different activities. Cash flow statements for the year ended 31 December 2009 | | | | | | | | | | | Group | | | 2009 | 2008 | 2007 | | Note | RM'000 | RM'000 | RM'000 | Cash flows from operating activities | | | | | Profit before tax | | 1,366,455

Cash Flow Statement

454 words - 2 pages Statement of cash flows Statement of cash flows helps users in at least 4 ways. • It can help users predict whether a firm will have positive future net cash flows • It can help users determine a firm’s need for external financing and its ability to pay debts and dividends. It gives users information about current cash flow, possible future cash needs, and borrowed cash that must be repaid in the future • The statement also helps users

Cash Flow Analysis

722 words - 3 pages 1 Cash Flow Analysis Signal Cable Company When Jay Smith took the job of Assistant to the President, two years ago, things were going rather well at the Signal Cable Company. The company was on an expansionary path and had branched into the fiber optics business. The prospects looked good and the economy was strong. The threat of competition was not too severe. Due to the expectation of increased demand for fiber optic communications

Related Essays

Cash Flow Essay 1077 Words

1077 words - 5 pages The statement of cash flow's primary purpose is to provide information regarding a company's cash inflows and outflows during a specified accounting period. This paper will focus more on how cash flow is helpful to external users. The statement of cash flow complements the income statement and the balance sheet. When credit decisions are made, many factors must be assessed. According to FASB (SFAS-95, paragraph 5) the information on actual cash

Cash Flow Essay 662 Words

662 words - 3 pages Cash Flow Assignment Companies are required to prepare a statement of cash flows (SCF) in their annual reports because it contains necessary information for external users, such as lenders and investors, who make economic decisions about the companies. It presents the sources and uses of cash and is a basis for cash flow analysis. Because it shows how much actual cash a company has generated, it presents if and how the company is able to

Cash Flow Essay 762 Words

762 words - 4 pages Statement of Cash Flows Understand the purpose of SCF Distinguish between its three sections Understand the difference between the direct and indirect methods for the Operations section Understand Cash Flow from Operations and how it is derived from Net Income Practice these concepts 15.515 2003 Session 9 1 Statement of Cash Flows Beginning Balance Assets = Liabilities + S.E. ∆Cash + ∆OA = ∆Liabilities + ∆CC + NI

Cash Flow Essay 1013 Words

1013 words - 5 pages being reported. The statement of cash flows is consists of three sections: Cash from Operating Activities, Cash from Investing Activities, and Cash from Financing Activities. Through analyzing each section of the cash flow statement we will determine what information is provided and what it means regarding the company. Overall the statement of cash flows can provide users with a better understanding of the financial health of a company by