Week 5 Individual Paper Cash Flow Statement
University of Phoenix
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 the cash flow of position of the organization activities into three key activities:
1. Operating activities
2. Financing activities
3. Investing activities
As a result they are required to supply information about the cash provided or used by each ...view middle of the document...
In detail the cash in financing activities supply information about the income from issuing shares, from issuing short-term or long term debt, from capital leases, repayment of debt principal, payments made for repurchase of shares and payments of dividends.
The purpose of cash flows from investing activities brings you with information about cash from alteration in assets, sales or purchase of bonds. It gives information about the investing activities that are used with operating activities. The cash that goes into the investing activity of the firm is reveal by the cash flow statement. This consist of loans made to suppliers, assets like and, purchase. The reason of the cash flow from operating activity gives an idea of the changes in cash flow from sales, accounts payable, inventory and accounts receivable features any unexpected changes.
In spirit, the reason of the cash flow statement is to inform about the past resource of cash to predict the ability of the entity's ability to make a positive cash flow in the future. In particular, the cash flow from operating activities provide information about the payments for the sales of loans, debt or equity instruments in a trading portfolio, the interest payment, tax payment, payments to suppliers for goods and services, dividends on equity securities, and others. In addition, the cash flow statement helps evaluate the ability of the entity to pay its bills and meet its obligations.
The cash flow statement offer information from where the organization’s cash is coming from. The cash flow statement also present information about the effect of investment and financing on the operations of the business. The cash flow statement gives us the opening balance of cash, the amount of cash received during the operating period, the amounts paid during the period, the net increase or...