i want to upload for helping purpose.from this student way understand cash flow easy.

2. Submitted To:
Dr. Saleem
submitted By:
sajid Hussain
Roll# MBM-19-22
MBA (1.5)
2nd semester
Bahauddin Zakariya university , Multan

3. Cash Flow
Statement

4. Meaning
 Cash: Cash means all cash + cash equitable + marketable securities +
bank balance.
 Flow: Flow means flow of cash from business to economy and
economy to businessi.e. cash inflows and cash outflows.
 Statement : Statement is a performa prescribed by Charted
Accountant Act,1948.
Thus,
Cash Flow Statement is a statement o f inflows (sources)
and outflows (uses) of cash and cash equivalents in an enterprise
during a specified period of time.

5. Purpose of cash flow statement
 Predict future cash flows
 Evaluate management decisions
 Determine the ability to pay dividends to stockholders’ and
payments to creditors
 Show the relationship of net income to the business’s cash flows
PURPOSES OF CASHFLOW STATEMENT

6. Statement Of Cash Flow
 While developing a cash flow statement we need information
from balance sheet and net income
 All items are classified as either cash inflows or cash outflows
If an item represents a cash INFLOW
 You ADD that item
If an item represents a cash OUTFLOW
 You SUBTRACT that item

7. Statement Of Cash Flow
 Remember: Cash is on the left hand side of the Balance Sheet
 Assets = Liabilities + Equity
 Most classifications (In/outflow) are easy An increase in gross fixed assets An
increase of long-term debt
Cash inflow =Decrease in Assets or Increase in Liabilities or equity
Cash outflow =Increase in Assets or Decrease in Liabilities or equity

8. Classifications Of The Statement Of Cash
Flows

10. Operating Activities
 These are principal revenue producing activities of the
enterprise.
 These are results of those transactions and events that
enter into determines of net profit or loss.
Methods
1. Direct Method
2. Indirect Method

12. Difference Between Indirect Or Direct
Method
“ The only difference between the two methods is,
how cash flow from operating activities are
calculated.”

13. Format of indirect Method
Net Income
+ Depreciation exp (noncash exp)
+ Losses from sale of assets
(full amount of sale already included in investing section)
- Gains from sale of assets
(full amount of sale already included in investing section)
- increases in current assets
+ decreases in current assets
+ increases in current liabilities
- decreases in current liabilities
= Net cash from operating activities

14. Direct Method

15. Format of Direct Method
+ Cash Received from Customers
- Cash paid for inventory
- Cash paid for operating expenses
- Cash paid for income taxes
- Cash paid for interest
+ Cash received from dividends and interest
= Net cash from operating activities

17. Cash Flow From Investing Activities
 Investing activities are acquisition and disposal of long term
assets and other investments not included in cash equivalent.
 The separate disclosure of cash flows from investing activities
are important because;
 It represents the extent to which expenditure have been made.
 For resources intended to generate future income and cash flows.

20. Cash flow from Financing activities
 Those activities that results in changes in size and composition
of owners capital and borrowings of the enterprise.
 it is useful in predicting claims on future cash flows by providers
of funds to the enterprise.

23. Example of Amazon company