This document provides an overview of cash flow analysis and its three main components: operating activities, investing activities, and financing activities. It defines operating activities as cash flows from principal revenue activities like sales and purchases. Investing activities relate to long-term asset transactions that generate future income and cash flows. Financing activities involve noncurrent liabilities and owners' equity items like debt and stock transactions. Cash flow analysis helps examine inflows and outflows.
8. • This section includes cash flows from the principal revenue
generation activities such as sale and purchase of goods and services.
• Cash flows from operating activities can be computed using two methods.
• One is the Direct Method and the other Indirect Method.
Eg. Payments to Suppliers, Employees.
2. Cash received from customers through sale of goods or serivces
performed.
9. • Cash flows from investing activities are cash in-flows and out-flows
related to activities that are intended to generate income and cash
flows in future.
• This includes cash in-flows and out-flows from sale and purchase of
long-term assets.
E.g Cash payments to acquire property, plant.
2. Cash paid for investing in Shares, Debenture,etc.
3. Cash received for Sale of Goods.
10. • Financing Activities include cash activities related to noncurrent
liabilities and owners’ equity.
• Noncurrent liabilities and owners’ equity items include :
(1) the principal amount of long-term debt,
(2)stock sales and repurchases
(3) dividend payments. (Note that interest paid on long-term debt is
included in operating activities.)
E.g Cash received for issue of Shares.
2. Cash paid for repayment of loans.
