What information can a potential investor obtain from the cash flows from operating activities
section of the statement of cash flows?
What information can a potential investor obtain from the cash flows from operating activities
section of the statement of cash flows?
Solution
Answer:
The following information can a potential investor obtain from the cash flows operating
activities:
1. The primary purpose of the statement of cash flows is to provide information about cash
receipt, cash payments,and the net change in cash resulting from the operating,investing,and
financial activities of a company during the period.
Cash flow from operating activities(CFO) is an accounting item that indicates the amount of
money a company brings in from ongoing , regular business activities, such as manufacturing
and selling goods or providing a service.Cash flow from operating activities does not include
long term capital or investment costs.
CFO can be calculated as follows:
Cash flow from operating activities=EBIT+ Depreciation-Taxes+/-Change in Working Capital
It is also known as operating cash flow or net cash from operating activities..
What information can a potential investor obtain from the cash fl.pdf
1. What information can a potential investor obtain from the cash flows from operating activities
section of the statement of cash flows?
What information can a potential investor obtain from the cash flows from operating activities
section of the statement of cash flows?
Solution
Answer:
The following information can a potential investor obtain from the cash flows operating
activities:
1. The primary purpose of the statement of cash flows is to provide information about cash
receipt, cash payments,and the net change in cash resulting from the operating,investing,and
financial activities of a company during the period.
Cash flow from operating activities(CFO) is an accounting item that indicates the amount of
money a company brings in from ongoing , regular business activities, such as manufacturing
and selling goods or providing a service.Cash flow from operating activities does not include
long term capital or investment costs.
CFO can be calculated as follows:
Cash flow from operating activities=EBIT+ Depreciation-Taxes+/-Change in Working Capital
It is also known as operating cash flow or net cash from operating activities.
