A cash flow statement presents information about the inflows and outflows of cash from a company's operating, investing, and financing activities over a period of time. It shows cash generated and used by the main business operations, investments in long-term assets or financial securities, and cash received or paid related to financing activities like issuing stock or taking loans. The statement is structured to first show cash flows from operating activities, then investing activities, and finally financing activities, with net changes in cash over the period.

1. Cash flow statements
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2. Cash flow statement
• A cash flow statèrent présents information
about the cash flow with the oganisation’s
main activity and those associated with its
investing and financing activities of the
period.It shows both inflow and out flow of
the cash during the period
• IAS 7 Cash Flow Statements
• `

3. cash flow Statement Usage
• This statement shows the dynamics of short-
term liquidity and long-term solvency
• Cash flow information is an essential input for
economic decision models
• It shows how much cash onlow or outflow is
made during the period by operating,investing
or financing activity

4. Cash conversion cycles
• Cash flows through the company continuously
in a series of short-term and long-term
conversion cycles
• The ST - cash conversion cycle (operating
cycle) relates to the main business operations
– = OPERATING ACTIVITIES

5. Format and structure of the cash flow
statement
• Cash flows from operating activities
• + Cash flows from investing activities
• + Cash flows from financing activities
• Net change in cash during period
• + Beginning cash balance
• Ending cash balance

6. Cash flows from operating activities
• Operating activities are primarily the revenue-generating
activities of a organisation
• “Operating cash flow” is conceptually most near to “net
profit”
• Following iteams are added or deducted:
1. Non-cash expenses and non-cash revenues (f.i.
depreciation expense)
2. Non-operating items (f.i. gain on disposal of tangible
fixed assets)
3. Timing differences between net profit and underlying
cash flow (f.i. changes in the level of inventories,
receivables, creditors, etc.)`

7. Operating cash flows: Examples
• Receipts from sale of goods and rendering of
services (cashing in of receivables included)
• Receipts from taxes on sales and VAT
• Receipts from royalties, fees, commissions,…
• Payments to suppliers (payment of creditors
included)
• Payments to employees
• Payments of taxes, VAT, fines

8. Operating cash flows –
Direct versus indirect method
2 methods for identifying and presenting the
operating cash flow:
• Direct method: engenders the presentation of
the most important categories of gross
operating cash inflows and cash outflows
• Indirect method: net operating cash flow is
determined by adjusting the (net) profit figure
for the 3 types of differences

9. Direct method - Example
• Cash receipts from customers 20250
Cash paid to suppliers and employees -17300
Cash generated from main operations 2950
Income taxes paid -1050
Net cash flow from operating activities 1900

10. Indirect method - Example

11. Cash flow

12. Cash flow

13. Cash flows from investing activities
• This shows item on the cash flow statement that
reports the aggregate change in a
company's cash position resulting from any gains (or
losses) from investments in the financial markets and
operating subsidiaries and changes resulting from
amounts spent on investments in capital assets
• Examples:
– Payments for newly acquired equipment
– Receipts from the disposal of a building

14. Cash flows from financing activities
• This catagory shows accounts for external activities
that allow a firm to raise capital and repay investors,
such as issuing stok, devidend etc.
Examples:
– Inflow from issuing stock
– Inflow from new bank loan
– Outflow from buy-back of shares
– Outflow of loans

15. Constructing a cash flow statement
1. First determine under which method cash
flow is made
2. Now begin with cash flow from operating
activies then Investing and financing
activities
3. Identify all transactions of the period leading
operating,Investing and Financing activities
4. Construct a cash flow statement according
to the formal rules

16. Classifying balance sheet movements
as inflows or outflows of cash