Supplement this with some videos where I solve problems via spreadsheets. https://www.youtube.com/watch?v=2SdlyvQ3kvo&t=21s

1. STATEMENT
OF CASH
FLOWS
ADVANCED
ACCOUNTING

2. Presentation
Objectives
• Explain the purpose and importance of the
Statement of Cash Flows in financial
reporting.
• Outline the three main sections of the
Statement of Cash Flows
• Work on an example of a transaction that
would be classified under each section.

3. Definition
The Statement of Cash Flows is a vital
financial statement that provides stakeholders
with insights into a company's cash inflows
and outflows during a specific period.

4. Purpose
Its primary purpose is to offer
transparency regarding the
sources and uses of cash,
helping investors, creditors, and
other users assess a company's
liquidity, solvency, and financial
flexibility.

5. The THREE sections
The statement is divided into three
main sections:
• Operating Activities
• Investing Activities
• Financing Activities

6. Operating Activities
This section reports cash flows from the
company's primary business activities.
Cash inflows typically stem from
• sales of goods or services
• collections from customers
• Interest received.
Cash outflows include
• payments to suppliers
• Wages and salaries to employees
• interest payments.

7. Investing Activities
This section accounts for cash flows related to the
purchase and sale of long-term assets,
investments in securities, and loans made to
others.
Cash inflows may result from
• the sale of property, plant, and equipment
• sale of investments.
Cash outflows include
• purchases of property, plant, and equipment
• acquisitions of other businesses.
• purchases of equipment for its operations

8. Financing Activities
This section reflects cash flows related to the
company's financing activities, such as
issuing or repurchasing its own equity or
debt securities.
Cash inflows may result from
• issuing new shares
• borrowing money through loans.
Cash outflows include
• dividends paid to shareholders
• repayments of borrowings.
• repurchases its own shares

9. EXAMPLE OF A
CASH FLOW
STATEMENT

10. SUMMARY
The Statement of Cash Flows is crucial for
understanding a company's cash position and how it
generates and utilises cash.
By analysing the three sections of the statement,
stakeholders can assess the company’s
• operational efficiency,
• investment strategies, and
• financial structure.