Cash Flow Statement Essay

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 assess a firm’s overall financial health. The combination OT, INV., FIN cash flows can help a user predict whether a firm will experience growth or whether it is in decline.
• The statement focuses the user on cash by reconciling the firm’s accrual net income to the change in the cash ...view middle of the document...

Indirect method is also easier to compute and requires on statement instead of two.

Types of information trade creditors, equity investors and managers expect to obtain from financial statements
• Trade Creditors want to know whether a company pays its bill on time and if they will pay bills promptly in the future. Long term creditors try to determine whether a company can make periodic interest payments and will repay the principal amount in the distance future
• Equity investors want to find out whether a company can distribute dividends in the future and whether its stock will increase in value. They try to predict whether a company will have sufficient cash and retained earnings to declare dividends. Investors base their predictions of future stock prices on the firm’s earnings.
• Managers have external and internal perspectives of decision makers. Managers want to present and analyse financial statements in the best possible light for the benefit of stockholders and creditors. Managers also use financial statements to monitor the firm’s performance, as do other external decision makers. Managers, has also access to additional info. In making business evaluations.

Financial Statements Essay

595 words - 3 pages the balance sheet under owner’s equity. The net income becomes the first line of cash on the cash flow statement as the cash flows from operations. The balance sheet starts with the cash at the end of the year under current assets as reflected on the statement of cash flows. The cash flow statement connects all three financial statements as the statement begins with the net income from the income statement, then the cash at the end of the year

Direct and Indirect Cash Flow Method

923 words - 4 pages Direct Vs. Indirect Cash Flow Method A company reports revenues and expenses on its income statement. Since most companies use accrual accounting, the income statement reveals little about cash flowing into and out of the business. To provide an understanding of cash flows, companies turn to the cash flow statement, which includes a section that restates income on a cash basis. You can choose between the direct and indirect methods to report

Cash Flow

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

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

Dsfsdafadsfdsfdsafadsfdafdsafdsfasfdfdas

1958 words - 8 pages CASH FLOW STATEMENT On the statement, cash flows are segregated based on source: Operating activities: involve the cash effects of transactions that enter into the determination of net income. Investing activities: concern with buying (and selling) property, plants, and equipment (PPE); acquiring and disposing of securities of other entities; Financing activities: include issuance and reacquisition of a firm's debt and capital

Statement of Cash Flows

790 words - 4 pages assess the company’s ability to generate future cash flows, assess the company’s ability to meet obligations and pay dividends, to understand the reasons for the difference between net income and net cash flow from operating activities, and assess the cash and noncash investing and financing transactions during the period” (Kieso, et al. 2007, 1121). The statement of cash flows reveals information regarding a company’s operating, financing, and

Go with the Flow Inc

660 words - 3 pages carrier in connection with its claim for reimbursement for the destroyed building should be classified as investing cash inflow. Moreover, cash receipt is not presented in the cash flow statement based on its intended use. Thus, these proceeds could be utilized for any purpose and will be presented accordingly in the cash flow statement. As given in the question, when the proceeds are used to fund its defined-benefit pension plan it will be

Direct And Indirect Cash Flows

415 words - 2 pages troubleshooting if necessary in the future. References Direct Vs. Indirect Cash Flow Method. Retrieved from: http://www.ehow.com/info_8264500_direct-indirect-cash-flow-method.html Examining Preferences in Cash Flow Statement Format. Retrieved From: http://www.nysscpa.org/cpajournal/2004/1004/essentials/p58.htm

Cash Flow

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

Cash Flow - 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

Modern Finance Key

4031 words - 17 pages treatment of interest expense. The accounting statement of cash flows treats interest as an operating cash flow, while the financial cash flows treat interest as a financing cash flow. The logic of the accounting statement of cash flows is that since interest appears on the income statement, which shows the operations for the period, it is an operating cash flow. In reality, interest is a financing expense, which results from the company’s choice of

Cash Flow Statement Essay

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 Essay

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 Essay

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

Income Statement And Cash Flow Essay

640 words - 3 pages to distribute all of its net earnings. The cash flow statement provides cumulative information regarding all cash inflow from both its ongoing operations as well as any external investment sources. The cash flow statement is not influenced by any kind of fancy accounting concepts. It is a true reflection of the company’s operating, investing, and financing activities. It helps to show why the company either lost or gained money during that

Cash Flow Statement Essay

Other Papers Like Cash Flow Statement

Financial Statements Essay

Direct and Indirect Cash Flow Method

Cash Flow

Cash Flow

Dsfsdafadsfdsfdsafadsfdafdsafdsfasfdfdas

Statement of Cash Flows

Go with the Flow Inc

Direct And Indirect Cash Flows

Cash Flow

Cash Flow - 762 words

Modern Finance Key

Related Essays

Cash Flow Statement Essay

Cash Flow Statement Essay

Digi's Cash Flow Statement Essay

Income Statement And Cash Flow Essay

Other Popular Essays