Analyzing Cash Flow Statements to Compare Companies

Statement Of Cash Flows. When Comparing Statement Of Cash
Statement of Cash Flows When comparing statement of cash flows between the two electronic companies, they both compliment each other. This
meaning where one company lacks the other makes up for. On the brief overview of the companies, Apple looks to be the stronger company. Their net
income over the last three years almost doubles Microsoft net income in the same period of time. Both companies keep a steady depreciation rate over
the three year time frame. Neither company takes a drastic dip or varies more than about a million dollars. The only difference is
Microsoft spends less in depreciation each year, coming in about four million dollars lower than what Apple spends yearly. This could be caused by
multiple things. Microsoft is a ... Show more content on Helpwriting.net ...
Apple generates revenues from product sales, subscription fees associated with iCloud and Apple Music, and extended warranty fees for its products.
Apple also generates revenues from the fees charged to content owners and application developers for selling their digital content and applications
through the iTunes Store, App Store, Mac App Store, iBook's Store, and Apple TV App Store.
The current ratio helps investors and creditors understand the liquidity of a company and how easily that company will be able to pay off its current
liabilities. This ratio expresses Apple and Microsoft current debt in terms of current assets. Therefore, in 2016 Microsoft's current ratio was 2.35 means
that the Microsoft has 2.35 times more current assets than current liabilities. However, Apple is current debt in terms of current assets. Is only 1.35 that
the Microsoft has 1.35 times more current assets than current liabilities. A higher current ratio is always more favorable than a lower current ratio
because it shows the company can more easily make current debt payments.
Figure 1
Figure 2
Higher quick ratios are more favorable for companies because it shows there are more quick assets than current liabilities. In 2016, Apple with a quick
ratio of 1.22 indicates that quick assets equal current assets. This also shows that
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Financial Statements Analysis : Cash Flow
Introduction
The financial statements analysis is very important to various users because it helps to express the overall financial health of the organization (Megan,
Hategan, Caciuc, & Cotlet, 2009). Managers use the cash flow statements to determine the cash generated by the operating, investing and financing
activities (Gibson, 2013). The statement of cash flow is a step by step presentation of cash inflows and out flows from the company's operating,
investing and financing activities, more so the statement demonstrates liquidity of an organization (Г–ztГјrk, 2015). The cash flow statement should
report all transactions that affect cash flow. Investors and creditors are interested in the cash flow statement because are able to determine how much
capital should be raised for investment, or if the company is able to meet its debt and pay dividends (Gibson, 2013). If no actual cash changes hands in
a particular transaction, then the Cash flow statement does not change. This study presents a comprehensive description of the components of the
statement of cash flows, the two alternative methods used to present the statement of cash flow, and a comparison between two cash flow statements of
two companies; Nike and Tech Data Corporation.
Methods of the Cash Flow Statement
Cash is the most important asset that a company may own, it is usually known to be in form of coins and notes (Foster III, Kevin McNelis, & Smith,
2012). The statement of cash flows was first introduced in 1987

Ratio Analysis and Statement of Cash Flows
Ratio Analysis and Statement of Cash Flows Financial ratios are "just a convenient way to summarize large quantities of financial data and to
compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a
company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.
Home Depot and Lowe's are two home improvement chains in the United States. Home Depot is the leading company in this industry followed by
Lowe's as the second largest. This paper uses financial ratios to compare these companies regarding operating profitability, asset utilization, and risk
management in the ... Show more content on Helpwriting.net ...
Leverage ratios measures how much financial leverage the companies have take on (Brealey & Myer & Marcus, 2003). Home Depot's and Lowe's
risk management can be analyzed by calculating their leverage ratios. The long–term debt ratio measures the long–term debt to total long–term capital.
Home Depot long–term debt ratio in 2005 was 0.9 and 0.32 in 2006. Lowe's long–term debt ratio was 0.20 in 2005 and 0.22 in 2006. It can be
concluded that in Home Depot, 32 cents of every dollar of long–term capital is in the form of long– term debt in 2006 and in Lowe's, 22 cents of every
dollar of long–term capital is in the form of long–term debt.
В•Home Depot Long–term debt ratio 2005 =
В•Home Depot Long–term debt ratio 2006 =
В•Lowe's Long–term debt ratio 2005 =
В•Lowe's Long–term debt ratio 2006 =
Another useful leverage ratio is the total debt. Home Depot's total debt ratio in 2005 was 0.39 and 0.52 in 2006. Lowe's total debt ratio in 2005 was
0.41 and 0.43 in 2006. Home Depot is financed 52% with debt in 2006 and Lowe's is financed 43% with debt in 2006. Even though, Home Depot has
a better profit than Lowe's, it can be also stated that Home Depot has more debt than Lowe's.
В•Home Depot total debt ratio 2005 =
В•Home Depot total debt ratio 2006=
В•Lowe's total debt ratio 2005 =
В•Lowe's total debt ratio 2006 =

Analyzing The Cash Flow Statement
Analysing the cash flow statement would be a great place to first look when initially analysing a company. It is difficult for a company to manipulate
the cash flow statements resulting in a honourable place to find the actual numbers. The cash flow statement is indicative of how well the company can
convert net income into cash; it also helps to determine if a company is strong or weak. Panera realizes a positive net cash flow and is a strong company
from their statements. To receive a deeper analysis, the three sections of the cash flow statements, cash flows from operations, cash flow from
investing and cash flow from financing should be dissected. In the first section of cash flows from operations (CFO), Panera has had a strong and
positive growth in cash flow from their operations from 2010–13 with a slight drop in 2104 due to the fact their net income decreased in 2014. During
all five years, Panera stands in a upright position as their CFO is greater than net income. A ratio can be computed to see how high the quality of net
income is by adding net income with deprecation dividing by the CFO shows that outside of 2010, net income proves to be of high quality. From the
years 2011–2014 this ratio hovers around 90%, while in 2010 this ratio falters to 75% due to a high level of cash generated in accrued expenses.
Although the net income remained high quality in 2014 it is concerning that figured dropped due to an increase in expenses.
Cash flow from investing

Income Statement Of Cash Flow From Operations
Income statement
An Income statement or profit and loss statement, indicated amount of profits generated by a firm over a given period, often 1 year in its most basic
form, the income statement may be represented as follows :
Sales Revenue – Expenses =Net income
The income statement begins with sales or revenue, from which we subtract the cost of goods sold to yield gross profits . Next, operating expenses are
deducted to determine operating income. Operating expenses includes marketing and selling expenses, general and administrative expenses and
depreciation expense. Finally by deducting the interest expense and the tax expense from the operating income we get the net income.
Balance sheet
A balance sheet provides a snap short about the firm's financial position at a specific point in time, presenting in time, presenting its asset holdings,
liabilities and owner's supplied capital.
Statement of Cash flows
The statement of cash flows is being prepared in the firms, as because of it does not include accrual basis items. It is an overview of cash flow from
operations, cash flow from investment activities and cash flow from financing activities
Cash flow from Operations + cash flow from investment opportunities +cash flow from
Financing activities = Net change in cash
3–2
Gross Profit:
Gross profit is calculated by deducting cost of goods sold from sales revenue
Gross profit= Sales – cost of goods sold

Operating profit:
Operating profit is calculated by

SKG Cash Flow Statement
The three most important points in the Group (Consolidated) Cash Flow Statement are as follows:
1. Cash generated from operations has increased from в‚¬929m in 2012 to в‚¬1,018m in 2013. This represents a 9.58% increase. This indicates that
there has been a significant improvement in the cash–generating ability of SKG's core activities. This is probably as a result of the large number of
businesses acquired in 2012. This information would be of important value to investors as it give them a good insight into SKG's cash–generating
process.
2.Net cash outflow from investing activities has decreased from в‚¬480m in 2012 to в‚¬366m in 2013. This represents a 23.75% decrease. SKG put
substantial investment into subsidiaries in 2012 (в‚¬179m). However, ... Show more content on Helpwriting.net ...
Firstly, the company's ability to maintain a strong cash flow in difficult economic times is impressive and also enabled a debt paydown of в‚¬171
million. SKG's current ratio has stayed relatively consistent over the years at around 1.5, again reflecting the financial health of the company and its
ability to meet its obligations. SKG also has no liquidity problems as reflected in the quick ratio. SKG's times interest cover ratio of 2.99 in 2013
shows that the company is very capable of managing its interest expenses. The strong earnings growth in the Americas shows that there are huge
growth opportunities for SKG. The company's strategy for takeover and expansion has resulted in a growing business with improving liquidity and a
bright

Cash Flow Statements Of Yum Brands, Inc.
This paper reviews the Cash Flow Statements of Yum Brands, Inc., Panera Bread, and Starbucks documented by case study 10–10 in our textbook for
the purpose of analyzing financial health based on cash flow data. (Gibson, 2013).
Cash Flow Data (Case 10–10)
Table 1 replicates provided case 10–10 Cash flow data for companies Yum Brands, Inc., Panera Bread, and Starbucks (Gibson, 2013).
Data ReviewedYum Brands, Inc.Panera BreadStarbucks 201020092010200920102009
Net cash provided by operating activities1.968B1.404B237.63M214.90M1.705B1.389B
Net Income – including noncontrolling interests1.178B1.083B111.60M86.85M0.948B0.392B
Operating cash flow/current maturities of long–term debt2.9223.80NoneNoneNoneNone
Operating cash flow/total debt30.57%23.27%72.23%89.50%63.06%55.12%
Operating cash flow per share$4.05$2.91$7.68$6.94$2.23$1.86
Operating cash flow/cash dividends4.783.88NoneNone9.97None
Table 1
Net Cash (Operating Activities) versus Net Income
Net income is total revenues minus total expenses incurred to generate those revenues all within the same reporting period. Net income is calculated by
the accrual accounting methodology meaning that the expenses incurred to generate revenues are reported at the same time the related revenues are
reported. Both revenue recognition and expenses paid may not coincide with actual cash transactions. Net cash from operating activities, on the other
hand, is not determined by accrual but by

Cash Flow Statement And Its Benefits And Disadvantages
When it comes to understanding business finances, the ability to read different financial statements becomes crucial. A cash flow statement is an
important and essential part of keeping a record of the business' financial liquidity. Business's liquidity matters because it often directly signals the
company's ability to pay off debts and to generate money.
In this guide, you'll learn to understand the definition of a cash flow statement with its benefits and disadvantages. The guide will also look at the
structure of a financial statement and the different preparation methods you can use to calculate a company's cash flow.
What is a cash flow statement?
Cash flow statement is one core three financial reporting tools companies use. It is designed to complement the balance sheet and the income statement.
In most accounting systems around the world, a cash flow statement is part of the mandatory reporting.
A cash flow statement is a an official record of cash and cash equivalents entering and leaving a business entity. It focuses on showcasing the sources
of money in the business as well as how it is spent over a specific period.
It usually looks at the general accounting period, such as financial year, but cash flow statement can be created over any specific period.
It is important to note that a cash flow statement doesn't include other money revenues, such as depreciation or other such non–cash items. The
statement is similar to income statement, as a statement to

Accrual Balance And Cash Flow Statement
Question 1
I would explain these methods (accrual balance and cash flow statement), to Irene in this way:
The most of the time the business bookkeeping system use two methods: the accrual basis or the cash basis (Gibson 2008).
On one hand, "Accrual accounting " is any record of revenues or expenditures when there is not a cash transaction. The principle to apply this method
is the "matching principle"( Berman& Knight, 2013), basically is the report of an expense or income statement in the equivalent period that is by
matching revenues to expenses. It measures the performance when cash transactions occur.
This method provides a precise picture of the company statement, but by his complexity is more expensive to apply. In addition, the Enterprise using
inventory, as well as, sales or credit must to use this method. Furthermore, the financial condition is affected by transaction as credits or projects and,
these statements have to be reflected in the accounting balance.
Moreover, Accrual accounting in opposite to the cash flow (that will be explained on the next item) reflects facts not probabilities, as an instance is
the sales of a product, when a customer receive a product by the credit system accrual accounting reflects the transaction as a fact in the account "
accounts receivable" , making an increase on the seller's revenue.
As said above, accrual accounting is the most precise representation of the financial results and the enterprise financial position, being

Analyzing The Statement Of Cash Flows The Cash Flow Statement
The use and purpose of the Statement of Cash FlowsвЂЁThe cash flow statement identify the sources of cash flowing into the business and shows
how they have been used over a period. Companies or users need to read this statement in conjunction with trading and profit and loss accounting and
balance sheet and also in the context of the statement in the previous year. (Cox, 2004) This statement provides a useful tool for analysing
management decisions and strategy. It can reveal such things as the amount of liquid funds generated from operating activities; the ways in which
financing occurred and investment activities during a period. This information can help companies or users to assess whether liquid funds generated
are sufficient and whether they have been raised and applied in an appropriate way. The importance of liquidity to a business is difficult to overstate.
It is not allow a profitable business to be forced to crease trading because it does not have enough liquid funds to meet its maturing liabilities. (Atrill et
al, 2001) The objective of International Accounting Standard 7 is require the provision of information about the historical changes in cash and cash
equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing
activities. The standard aim to give the financial statements of the companies with a basis for assessing the ability of the entity to generate cash and cash

Cash Flow Statement
Statement of Cash Flows Paper
The Statement of Cash flows is a very useful financial statement that can benefit investors, managers and even auditors. The statement of cash flows
has not been around as long as the other financial statements such as the balance sheet or income statement. It basically "illustrates the way
accounting evolves to meet the requirements of users of financial statements." (Marshall, 2003) The statement of cash flows is designed to provide
important information about the cash that a company has received or has paid out during a certain time period. It provides a reason for the changes of
cash received and paid by a company by taking into ... Show more content on Helpwriting.net ...
Investors will be interested in this because they will be able to decide whether or not it is worth it to buy shares of the company. Managers benefit
from this statement because they are able to see whether the company is making money and whether the company's performance is improving. They
can also use this to decide how they may improve the out put of the company, what changes need to be made. Auditors are able to use the statement
of cash flows to see exactly what a company did with their money. They are able to dissect where the company received money from, where it
invested its money, and what operations the company took part in. So the statement of cash flows is useful for many different people who are involved
in a corporation.
Management of a company would probably be most interested in viewing the Operating Activities section of the Statement of Cash Flows. This section
pinpoints the exact inventories, liabilities, depreciation and receivables of the company during a certain time period. So managers are able to see what
operations are occurring, what type of inventory is on hand and what the assets and liabilities of the company are.
An auditor would be interested in the above section, but just as important would be the Investing and Financing Activities sections. Auditors need to
know where the company invested its money and where it received its money in order to figure out whether

Ifrs Vs Gaap : Statement Of Cash
IFRS vs GAAP Statement of cash flows 'Cash and cash equivalents' include certain short–term investments and, in some cases, bank overdrafts. Like
IFRS, 'cash and cash equivalents' include certain shortterm investments, although not necessarily the same short–term investments as under IFRS.
Unlike IFRS, bank overdrafts are considered a form of short–term financing, with changes therein classified as financing activities. The statement of
cash flows presents cash flows during the period, classified by operating, investing and financing activities. Like IFRS, the statement of cash flows
presents cash flows during the period, classified by operating, investing and financing activities. The separate components of a single transaction are
classified as operating, investing or financing. Unlike IFRS, cash receipts and payments with attributes of more than one class of cash flows are
classified based on the predominant source of the cash flows unless the underlying transaction is accounted for as having different components. Cash
flows from operating activities may be presented using either the direct method or the indirect method. If the direct method is used, then an entity
presents a reconciliation of profit or loss to net cash flows from operating activities; however, in our experience practice varies regarding the measure
of profit or loss used. Like IFRS, cash flows from operating activities may be presented using either the direct method or the indirect method. Like
IFRS, if

To What Extent Might the Cash Flow Statement Help to...
To what extent might the cash flow statement help to overcome the traditional limitations of financial statement analysis in evaluating the past
performance and predicting the future successes or failures of business organisations?
Accounting is the major means of organizing and summarizing information about economic activities. The information which is provided by the
accounting practices through financial statement analysis, provides help to decision makers to take decision. There are various forms of Accounting
models which is of great help example if the financial statements for an organization is made statements like Balance Sheet, Profit and loss Account etc
it helps the organization out to makes its stand in the market ... Show more content on Helpwriting.net ...
This is a disadvantage of Ratio because it has to be depended on other figures when it is individual it represents nothing
There are certain standard set which cannot became for organisation now this again deviates from one another for different organisation.
Ratio is not calculated on a daily basis it is prepared as and when the income statement and balance sheet is prepared that takes palace annually.
MODERN MEHTOD OF ANALYSING: CASH FLOW STATMENT
Cash flow is one of the most vital elements in the survival of a business to include CFs in the annual report of the company is a recent concept.
Complementing the balance sheet and income statement, the cash flow statement (CFS), its a mandatory part of a company 's financial repot,
records the amounts of cash and equivalents entering and leaving a company. The CFS helps the investor to understand and figure out the position
of the company from where the money comes and where the money is spent by an Survival of a business depends not only on profits but perhaps
more on its ability to pay its debts when they fall due. Shareholders might believe that if a company makes a profit after tax , then this is the amount
which it could afford to pay as a dividend. Unless the company has sufficient cash available to stay in business and also to pay a dividend, the
shareholders ' expectations would be wrong.
It can be positive, or negative, which is obviously

Cash Flow Statement: Dowlas Iron Company
2. Cash Flow Statement
2.1: Before Availability of Cash flow statements
2.2: Date of Applying Cash flow statements
2.3: What is Cash flow statement?
2.4: Direct Vs. Indirect Method
2.5: Did the invention of Cash flow statement cover the gap info & why?
2.1: History of cash flow statement:
Before the availability of the cash flow statement the business firms suffered from the lack of the information that leaded to bankruptcy of those firms.
The history of cash flow statement can be drawn back to the year 1863. In 1863 Dowlas Iron Company had recouped from a great business downfall,
but the company had no enough cash to invest for new blast furnace, even though having made a profit. They had to clarify why they had no money to
invest, the comparison ... Show more content on Helpwriting.net ...
Indirect Methods of Cash flow statement:
пЃ¶Difference between direct and indirect methods:
a.Direct method:
Advantages :
Is more preferred to use according to international accounting standards board (IASB) and generally accepted accounting principles (GAAP), because
it contains more details and it is more easier than the indirect method, also it sorts all the company's' transactions and summarizes them into categories
which makes it more easier for the company to sort out checks and paid bills.
Disadvantages :
Companies with huge number of transactions will not be able to record every detail because of time and more labor cost. For the stock corporations
the cash flow statement is made public so the competitors could use it against the company.
b.Indirect method:
The main objective is to change the accrual basis of cash into cash basis.
More difficult and complicated than the direct method.
Reconciles accrual net income to cash from operating activities.

пЃ¶Information needed for cash flow statement:
As it has been shown in the article "how to prepare a cash flow statement" by "Zion's bank" they stated the

Financial Statements Of A Business Entity
A Glimpse at the Financial Statements of a Business Entity Financial statements are important tools that are used by owners, managers, and investors
of a company in order to analyze profitability as well as where money is being spent and where it is coming from. In order to explain further about
how the financial statements are utilized, I have provided a brief breakdown of the income statement, the balance sheet, and the statement of cash flows.
Income Statement
The main purpose of the income statement is to provide information to the investors, owners, and managers of the business about the revenue and
expenses produced by the company for a period of time. The statement is usually issued quarterly or yearly depending on the business (Melicher &
Norton, 2013). The major expenses that are found on an income statement are: cost of goods sold, operating expenses, taxes, and miscellaneous
expenses.
Cost of Goods Sold Cost of goods sold consists of any expenses that occur from the direct production of the goods or services. These expenses can be
further broken down to include the cost of material, labor, and overhead. Material is just that, anything that makes up the product. The labor consists of
the man–power used in the production of the goods or services. Overhead can included things like electricity, rent, utilities, supplies, etc.
Operating Expenses Operating Expenses are expenses that are not directly related to production of the goods or services. Sales and

Statement of Cash Flows Essay
Statement of Cash Flows
STATEMENT OF CASH FLOWS1
The Statement of Cash Flows is a very viable and helpful resource. Decision makers use the Statement of Cash Flows in many instances to assess the
viability of a firm. Within the statement are many types of elements that are incorporated to create the complete Statement of Cash Flows. Also within
the statement is what is known as the inflows and outflows. In some cases, activity notes may be incorporated to help complete such representations. To
fully understand the Statement of Cash Flows one must know the definition of it and what it in fact means. The Statement of Cash Flows is a change
statement summarizing the transactions that caused cash to change ... Show more content on Helpwriting.net ...
The cash flow statement has three components of cash flow which includes how cash enters and leaves a company such as operating, investing and
financing as mentioned above.
The Statement of Cash flows includes measuring the cash inflows and outflows caused by operations. Cash inflows include cash received from: *
Owners when sales are sold to them * Creditors when cash is borrowed through notes, loans, mortgages, and bonds
Whereas cash outflows includes cash paid to: * Owners in the form of dividends or distributions
STATEMENT OF CASH FLOWS 3 * Owners for the reacquisition of shares previously sold * Creditors as repayment of the principal amounts of debt
(excluding trade payables that relate to operating activities)
The operations component of cash flow reflects how much cash is generated from a company's products or services. Generally, changes made in cash,
accounts receivable, depreciation, inventory and accounts payable are reflected in cash from operations.
The cash flow is calculated by making certain adjustments to net income by adding or subtracting differences in revenue, expenses and credit
transactions (appearing on the balance sheet and income statement) resulting from transactions that occur from one period to the next. These
adjustments are made because non–cash items

Tata Motors Cash Flow Statement
Abstract: Cash flow statement is an important document that gives quick and ready information regarding the cash flow analysis of a company. It is a
statement depicting change in cash and cash equivalents position during a period. TATA Motors is an Indian Multinational automotive company. It is
the world's fifth largest motor vehicle manufacturing company, fourth largest truck manufacturing company and also the second largest bus
manufacturing company by volume. Recently, the concern has reported fluctuating turnover for last five years in its annual reports. Hence, it is
necessary to judge the sufficiency of the cash position to support the success story of the company. This study is based on financial figures disclosed
by company in five... Show more content on Helpwriting.net ...
To measure the weight of such sources and uses of cash against cash profit position of the firm.
To identify the strength and weakness in cash flow position of the firm.
IV. RESEARCH METHODOLOGY:
Research Type: It is an analytical research based on the secondary data. It investigates the financial figures of the concern using theoretical framework
of cash flow statement analysis. Figures of cash flow statement of 5 years i.e. 2011–12, 2012–13, 2013–14, 2014–15 and 2015–16 is analyzed to
identify strength and weakness in cash flow of the business.
Type of Data: Secondary Data
Secondary data involves figures denoted regarding cash inflow and cash outflow in cash flow statement reported in annual reports of Tata Motors for
five years. Also some important information is collected by various sources of secondary data such as books, websites and official release of business
firm.
Analysis tools and techniques:
Figures are analyzed using basic mathematical tools like average and percentage etc. and it is interpreted using various kinds of charts and graphs.
V. DATA ANALYSIS AND INTERPRETATION.
1.Analysis of Revenue:
Table 1: Net Revenue in

Presentation Of The Statement Of Cash Flows
Presentation of the Statement of Cash Flows The statement of cash flows is a relatively new statement. Focused on cash–basis accounting rather than
accrual–basis, the purpose of this statement is to describe the effects of a company's cash inflows and outflows. This paper will discuss the current
standards for the statement of cash flows, the history of the statement, and if the direct method or indirect method is more advantageous for the users.
Current Generally Accepted Accounting Principles(GAAP) states, "[i]n reporting cash flows from operating activities, entities are encouraged to report
major classes of gross cash receipts and gross cash payments and their arithmetic sum–the net cash flow from operating activities (the direct method)"
(ASC–230–10–45–25). In addition, per ASC 230–10–45–30, if a company chooses to report the change in cash flow from operating activities using the
direct method, it must also include a separate schedule containing the indirect method, which is a reconciliation of net income to cash flows from
operating activities. In choosing to write the standards this way, the Financial Accounting Standards Board (FASB) considered both methods and
recognized the advantages of each. However, the board noted that neither method provided enough benefit on its own to justify the required use of one
or the other. The board believes that the more comprehensive approach would be to use the direct method in the operating section of the statement of

Balance Sheet and Statement of Cash Flow
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C H A P T E R
5
BALANCE SH EET AN D STATEMENT OF CASH FLOWS
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 2 3 4 5 6 7 8 9
Explain the uses and limitations of a balance sheet. Identify the major classifications of the balance sheet. Prepare a classified balance sheet using the
report and account formats. Determine which balance sheet information requires supplemental disclosure. Describe the major disclosure techniques for
the balance sheet. Indicate the purpose of the statement of cash flows. Identify the content of the statement of cash flows. Prepare a basic statement of
cash flows. Understand the usefulness of the statement of ... Show more content on Helpwriting.net ...
USEFULNESS OF THE BALANCE SHEET
Op
Liquidity era tio ns

How quickly will my assets convert to cash?
By providing information on assets, liabilities, and stockholders' equity, the balance sheet provides a basis for computing rates of return and evaluating
the capital structure of the enterprise. As our opening story indicates, analysts also use information in the balance sheet to assess a company's risk2 and
future cash flows. In this regard, analysts use the balance sheet to assess a company's liquidity, solvency, and financial flexibility. Liquidity describes
"the amount of time that is expected to elapse until an asset is realized or otherwise converted into cash or until a liability has to be paid."3 Creditors
are interested in short–term liquidity ratios, such as the ratio of cash (or near cash) to short–term liabilities. These ratios indicate whether a company,
like Amazon, will have the resources to pay its current and maturing obligations. Similarly, stockholders assess liquidity to evaluate the possibility of
future cash dividends or the buyback of shares. In general, the greater Amazon's liquidity, the lower its risk of failure.
GROUNDED
The terrorist attacks of September 11, 2001, showed how vulnerable the major airlines are to falling demand for their services. Since that infamous date,

Analyzing The Balance Sheet Of Isaleh And The Related...
EXECUTIVE SUMMARY The purpose of this report was to analyze the balance sheet of Isaleh and the related Income Statements and cash flows
for the year ended 31st December 2014. Specific objectives were to give Babs Lee an understanding of why there is an Income Statement as well as a
Cash Flow Statement, what Working Capital is and why it is important and to give an understanding of what a credit sale is in business context. This
report recommends strategies to help Babs Lee understand the financial statements of the business.
Table of Contents
EXECUTIVE SUMMARY2
1.INTRODUCTION4
2. DISCUSSION5
2.1 Why the income statement is prepared using the accrual basis of accounting and how it differs from cash accounting5
2.2 What working capital is and why it is important to manage it6
2.3 what is a credit sale is and why isaleh sales ukuleles on credit and the costs associated7
3. CONCLUSION8
REFERENCES9
1.INTRODUCTION
This report was commissioned by Babs Lee, the owner of Isaleh. Its purpose is to analyze and give Babs Lee an understanding of the financial
statements and credit sales.
Isaleh is a wholesale business that sells Ukuleles to music shops throughout New Zealand. Babs Lee's Uncle passed away and left the wholesale
business to her. However, the executor of the will, R. Senior provided her the latest financial statements but Babs Lee lacks an understanding of the
financial statements, why an Income Statement in needed as well as a Cash Flow Statement,

Cash Flow Statements Tax Calculations And Balance Sheet
CASE STUDY
Name: Xianbo Xie
Course: Introduction financial planning
Tutor: Cath Sharples
Question one
Cash flow statements tax calculations and balance sheet for the 3 financial years ending 30 June 2015 – 2017
Family balance sheet
Financial year ending June 2015
Assets$$
Family house620,000
Boat20,000
Car Jenny35,000
Car Jerry12,000
House contents50,000
Commonwealth Bank shares53,000Term deposit with Bundoora 165,000
Savings account with Bundoora 26,000
Superannuation funds (combined)330,000
Total1,290,000
Liabilities
Family home mortgagee250,000
Personal car loan16,000

Credit card debt6,000
Total272,000
Net worth1,018,000
The family's Tax Calculation
Financial year ending June 2015 $$ ... Show more content on Helpwriting.net ...
deposits4,455
Employer Superannuation contribution (15% tax deduction)9975215,633
Employer Superannuation contribution (15% tax deduction)4750
Total188,959
Less tax payable78,235.06
Net income110,706
Expenses
Mortgage and loan payments29,500
Work related expenses2,500
Insurance3,000
Household expenses25,800
Private education expenses 17,000
Utilities4,200
Entertainment 8,000
Travel and holidays7,000
Motor vehicle expenses 8,500
Sundries2,000
Total107,500
Surplus3,200
Family balance sheet
Financial year ending June 2016
Assets$$
Family house663,400
Boat19,400
Car Jenny35,000
Car Jerry12,000
House contents48,500
Commonwealth Bank shares52,500Term deposit with Bundoora 165,000

Savings account with Bundoora 26788
Superannuation funds (combined)362,230
Total1,395,58
Liabilities
Family home mortgagee224,600
Personal car loan11,900
Credit card debt6,000
Total242,500
Net worth1,152,658
The family's Tax Calculation
Financial year ending June 2016 $$
Assessable incomeJerry's Salary108,150
Jenny's Termination payment 15,000
Fully franked dividend2,729.5
Savings account269
Term deposits4,455conservative fund8,619capital stable fund5,622.75
Less Allowable deductions
Work related expenses 2,500
Total allowable deductions2,500
Taxable income173,585.8
Gross tax payable52,173.45
Add Medicare levy (2%)3,471.716
Net tax payable55,645.15
Family 's Cash flow statement
Financial

Focus Point Holding Berhad Cash Flow Statements
4. Critically discuss the group and company's statement of cash flows The preface to discuss the group and company's statement of cash flow is clarify
whether Focus Point Holding Berhad has fulfil its responsibility as a listed company to preparing its annual reports in compliance with the Bursa
Malaysia Listing requirements. The statement of cash flow in the annual report are required to be prepared in accordance with the statutory
requirements which is Malaysia Financial Reporting Standards (MFRS) 107.
Objective of statement of cash flow
Cash flow statements are usually used to determine the liquidity and solvency of one company. Hence, Focus Point Holding Berhad details out the cash
or cash equivalent inflow and outflow of the company ... Show more content on Helpwriting.net ...
(ii)Investing activities: acquisition and disposal of long–term assets and other investments not included in cash equivalent.
(iii)Financing activities: activities that result in the change in the size and composition of the contributed equity and borrowings of the entity.
Reporting cash flows from operating activities
According to MFRS 107.18, an entity shall report its statement of cash flow by using either:
(i)Direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or
(ii)Indirect method, whereby profit or loss is adjusted for the effects of transaction of a non–cash nature, any deferrals or accruals of post or future
operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.
Focus Point Holding Berhad using indirect method in preparing statement of cash flow as it made adjustment on non–cash transactions, deferrals of
future receipts, accruals of future payments and items related to investing and financing.
Reasons of using indirect method in preparing statement of cash

Financial Statements Of Cash Flow
The statement of cash flow is one of the financial statements that shareholders tend to evaluate to ensure that all transactions are properly stated in each
of the three activities mentioned above; operating, investing, and financing. The statement of cash flows is also commonly overlooked by both the
balance sheets and income statements numbers.
The cash flow statement is important for the business as it brings valuable information that can help evaluate a corporation. The statement will show if
the business is low on money even if the financial statements shows that is profitable. It will reflect if the owner withdrew to much cash from the
corporation. It will also reflect the principal payment of a loan and the correct amount used to acquire equipment, property, and other assets that the
income statement will not show. The absence of this statement can hinder the operation of a business as the owner could easily fall in the negative
(loss) by not having eyes on the cash out flow exceeding the cash inflow.
Therefore, the adaptation of having a statement of cash flows becomes essential to any business or organization. With the adaption of such a system
personnel such as stakeholders become essential. Stakeholders are a key role personnel when it comes to motivating the employees, acquiring
resources to assist on the final decision or final project, provide a valuable input, and ultimately build trust with to increase consensus at the final
decision making. The

What Is A Cash Flow Statement?
What is a Cash Flow Statement?
One of the most important part of starting a business is creating a cash flow statement, also known as the statement of cash flow. The statement of
cash flows is defined as a statement of sources and uses of cash in a business for a specific period of time (Katz, J. & Green, R.). The statement of cash
flow is the main one, of four financial statements, the other statements are just as important when owning and operating a business. The way that a
business owner can prove the business is making money would be through keeping careful accounting records. Based on an accountant, there are five
reasons why accounting is important to a small business.
It proves how your business is doing financially.
Shows ... Show more content on Helpwriting.net ...
Income Statement is composed of the following two elements:
пѓјIncome: The business earnings over a specified period
пѓјExpense: The cost of operating the business over a period
пѓјNet profit or loss is obtained by deducting expenses from income
Statement of stockholders ' equity; Statement of Changes in Equity, also known as the Statement of Retained Earnings, details the movement in owners
' equity over a period. The movement in owners ' equity is derived from the following components:
пѓјNet Profit or loss during the period as reported in the income statement
пѓјShare capital issued or repaid during the period
пѓјDividend payments Gains or losses recognized directly in equity
пѓјEffects of a change in accounting policy or correction of accounting error ("What Is A Cash Flow" 2004).
Components of Cash Flow Statement
The inflow and outflow of cash must be reported in the statement of cash flow. It can be reported as either a direct statement; only from the business's
cash records or indirect statement; starts with net income and adjusts the accruals and deferrals that can be reconciled with the others statements. The
following are activities that are recorded in the cash flow statement:
1.Operating activities includes all transactions performed in producing, and selling goods and services. It shows the movement of

The Purpose Of The Cash Flow Statement
There is an old saying by Earl Wilson (2015) that states "Today, there are three kinds of people: the haves, the have
–nots, and the
have–not–paid–for–what–they–haves" (p. 1). This saying also applies to businesses, and investors will try to identify which category a company falls in
as they conduct their research. Investors want to know they are committing their money to an organization that can effectively manage its cash. Cash is
the fuel within every organization. It is extremely important for every executive, manager, and investor to understand the cash flow battle rhythm within
their organization by utilizing the statement of cash flow. Analyzing the statement of cash flow, will enable investors to determine if a company is
effective at managing their finances.
Purpose of the Cash Flow Statement
Cash inflow and outflow is a litmus test of a company's performance during a specific time frame. Cash is the lifeline of the company and the
availability or lack of cash is a clear indication of a successful or failing business for most financial analysts, investors and company management. The
statement of cash flow is the means used by many to view the cash movement within an organization. According to Epstein (2014), "The purpose of the
statement of cash flows is to determine how cash flowed into and out of the company during a certain period of time" (p.156). This management tool
can assist executives, financial managers and stock holders identify the organization's

Analysis of Cash Flow Statement Essay
Analysis of Cash Flows Statements By Song Hanxiao
Pace University – New York Campus
MBA 640, 72052
Fall 2011
John Paul
Required Research Paper
Contents Abstract ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––3| I.
Introduction of importance of Cash Flows statements –––––––––––––––––––––––––––––––––––––4| II. Function of Cash Flow Statements
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––5| III. Analysis of Cash Flow Statement
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––7| 1. Analysis of Repayment Ability
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––7| 2. ... Show more content on Helpwriting.net ...
For example, if one the following is one company's cash flow statement: revenue of 4.8 million from current period sales and providing labor, bonus
of 0.75 million for employees, purchasing fixed assets in current period for 0.95 million, and payment of 0.18 million for banking interest. As the
same, cash inflows and outflows from other operating activities can be allocated into cash flow statement. Therefore, cash flow statement can reveal
the reason of cash inflows and outflow, to say in another way, cash comes from where and go to where, which informationbalance sheet and income
statement cannot provide. 2. Helpful to evaluate the corporation's overall financial situation objectively
One purpose of making financial statements by managements is to reflect company's operation and financial situations, which can provide benefit
information for decision making level. Another aspects is creditors and investors seek to better investment decision after they analyze financial
statements. Therefore, it is very important to management level, creditors and investors through evaluating corporation's financial status objectively.
And we can analyze through three parts, which is operation activities, investing activities and financial

The Cash Flow Statement Is An Important Financial...
What is the purpose of a cash flow statement?
a.The cash flow statement is an important financial indicator of a company 's short–term viability. The report describes where the entity 's cash is
generated from and how it is spent over a certain designated period of time.
2)List and describe the elements making up the cash flow statement.
a.The cash flow statement is composed of cash inflows (receipts) and outflows (expenses). Inflows and outflows are reported for operating, financing,
and investing activities.
3)List and define the different types of cash receipts in a cash flow statement.
a.Cash receipts are reported for operating, financing and investing activities. Cash from operations includes cash that is obtained through daily business
operations. Cash from investing is generated from investing in assets that produce a yield. This can include the sale of equipment, other businesses, or
long–term assets. Cash from financing is cash that is received or paid due to borrowing practices. Dividends are also included in this section.
4)Describe the two different methods of preparing a cash flow statement. What is the primary difference between the two methods?
a.The two different methods of preparing a cash flow statement are the direct and indirect methods. The direct method is encouraged by the financial
accounting standards boards, but not required. The differences in the two only affect the presentation of the operations section, not the investigating and

The Income Statements, Balance Sheet, And Statement Of...
Income Statements – Income Statement, Balance Sheet, and Statement of Cash Flows
Financial statements are very important for decision makers in the business world. They inform the firm's owners, lenders and managers of the
performance of the company and their employees. Standardized financial statements make for financial transparency between all businesses and sectors
of business. Financial statements are important to companies not only to measure performance but to obtain capital through debt and equity. The main
financial statements used by all companies, private and public, are the balance sheet, income statement (profit and loss statement), and statement of cash
flows. Companies also use financial ratios to determine if they are performing to standards and are determine if they are increasing revenues
sufficiently with the amount of expenses and debt taken on.
Income Statement
The income statement measures the flow of business activity by comparing revenues to the expenses over a period of time, as opposed to the
momentary status of the business at a point in time (Brian P. Brinig, 2011). The income statement is important because it lists the amount of expenses
that were incurred to create the revenues of the company. The biggest typical expenses for a company are the cost of goods sold, advertising and
promotion, depreciation, wages and salaries, and rent.
Balance Sheet
A balance sheet lists assets, liabilities and equity of a business at a single point in

Cash Flow Statement
Cash Flow Statement:
A cash flow statement is a financial report with information on the sources of a firm's cash and how it was spent within a given period of time. In
contrast to other financial reports, a cash flow statement does not present information on non–cash items like depreciation. As a result, the cash flow
statement is beneficial in analyzing the temporary feasibility of a company, especially its capability to pay bills. Many analysts recommend
entrepreneurs to study a cash flow statement quarterly because of its importance for small and large businesses.
Since a cash flow statement classifies cash receipts and payments based on operations, investments, and financing activities, it's categorized into these
three functional sections within the business. Therefore, the major parts of the cash flow statement are cash–related operations, investments, financing,
and net increase or decrease in cash. While cash from operations is cash generated from a firm's daily operations, the investing cash is generated from
assets' investments. On the other hand, financing cash is paid or received from the issued or borrowed funds whereas net increase or decrease in cash
is from annual rise or reduction in cash. It's important to note that regardless of the slight differences in cash flow statements, they all present financial
information in all the four categories ("Cash Flow Statement", n.d.).
One of the major advantages of a cash flow statement is that it provides

A Study of Cash Flows Statement
I. Introduction
The purpose of this paper is to present and explain the statement of cash flows by incorporating the statements No. 95, 102 and 104 that establish
standards for cash flows reporting issued by FASB[i].
FASB Statement No. 95 (FAS 95) "Statement of Cash Flows" supersedes APB Opinion No. 19, Reporting Changes in Financial Position, and requires
a statement of cash flows as part of a full set of financial statements for all business enterprises[ii] in place of a statement of changes in financial
position and classify cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides
definitions of each category.
FASB Statement No. 102 (FAS 102) amends FAS 95, to exempt... Show more content on Helpwriting.net ...
Examples of items commonly considered to be cash equivalents are treasury bills, commercial paper, money market funds, and federal funds sold (for
an enterprise with banking operations). Cash purchases and sales of those investments generally are part of the enterprise 's cash management activities
rather than part of its operating, investing, and financing activities, and details of those transactions need not be reported in a statement of cash flows.
An enterprise shall establish a policy concerning which short–term, highly liquid investments that satisfy the said definition of cash equivalents. For
example, an enterprise having banking operations might decide that all investments that qualify except for those purchased for its trading account will
be treated as cash equivalents, while an enterprise whose operations consist largely of investing in short–term, highly liquid investments might decide
that all those items will be treated as investments rather than cash equivalents. An enterprise shall disclose its policy for determining which items are
treated as cash equivalents. Any change to that policy is a change in accounting principle that shall be affected by restating financial statements for
earlier years presented for comparative purposes.
IV. Gross and net cash flows
Generally, information about the gross amounts of cash receipts and cash payments during a period is more relevant than information about the net
amounts of cash receipts

Examples Of Cash Flow Statement
The first thing to know about the cash flow statement is its division into three separate sections. A cash flow statement looks at three components of
core operations, investing, and financing in order to come to the final conclusion.
One of the major distinctions in a cash flow statement, compared to income statement and balance sheet, is the lack of reporting on future incoming
and outgoing cash. Furthermore, some of the things you won't know in a loss and profit statement, but which feature at the cash flow statement include:
Owner's draws out of the business
Payment of credit card principal
Payment of loan principal
A cash flow looks at only the movements in the three sectors during the determined period, not what is going to happen ... Show more content on
Helpwriting.net ...
You can see all the different sections and how the figures are calculated. As you can see, the bottom of the statement shows the total cash flow of the
company for the accounting period.
The above example statement shows you the company total cash flow, as well as where majority of the liquidity came from.
Naturally, not all cash flow statements show a positive cash flow. But it is important to remember that a negative cash flow doesn't necessarily mean
the business is failing. Sometimes a negative cash flow is part of a company's decision to heavily invest in new inventory, for example, which might
increase the cash flow the following year. Therefore, as mentioned, you need to use a cash flow statement as part of your financial analysis, but not
rely solely on it.
Overall, you also want to compare your cash flows from different periods. While a single negative cash flow statement might not signal trouble, if your
cash flow is constantly on the negative, your business is clearly having liquidity problems. It usually means the business is having difficulties paying
debt and relies too much on

Income Statement Of Pfizer Company
Income Statement of Pfizer Company for the fiscal year 31 March 2014 In Millions
Sales100000
Cost of goods sold45000
Gross Profits55000
Operating Expenses
Selling, General and Administration Exp10000
Research and development Expenses15000
Total Operating Expenses25000
Operating Income30000
Interest Expenses12000
Earnings before tax18000
Income tax provision5000
Net Income13000
Statement of Cash Flow of Pfizer Company for the year ended on 31 March 2014 In Millions
Net Cash Flow from Operating Activities35000
Net Cash Flow from Investing Activities (13500)
Net Cash Flow from Financing Activities(15500)
Net Increase in the cash and cash equivalent6000
Cash and Cash equivalent beginning balance35000
Cash and Cash equivalent Ending Balance41000
Balance Sheet of Pfizer Company as on 31 March 2014 In Millions
AssetsAmount in $Liabilities and EquityAmount in $
Current AssetsCurrent Liabilities
Cash and Cash Equiv.41000Account Payables39500
Short term Investment12000Accrued & other Liab.21500

Receivables28000Total current liability61000
Inventories40000Long term debt150000
Other Current Assets27000Other non–current liab37000
Total Current Assets148000Total Liability248000
Property Plant and Equipment165000Stock Holders Equity
Long term Investment 85000Paid up Capital 170000
Other Noncurrent Assets56000Retained Earning36000 Total stock holder equity

Chapter 12 the Statement of Cash Flows
CHAPTER 12
THE STATEMENT OF CASH FLOWS
OVERVIEW OF EXERCISES, PROBLEMS, AND CASES
Estimated Time in
Learning OutcomesExercisesMinutesLevel
1.Understand the concept of cash flows and accrual accounting,15*60Diff and explain the purpose of a statement of cash flows.
2.Explain what cash equivalents are and how they are treated on 15Easy the statement of cash flows.12*10Easy
3.Describe operating, investing, and financing activities and give 210Easy examples of each.310Mod 12*10Easy 13*10Easy 14*25Diff
4.Describe the difference between the direct and the indirect method of computing cash flow from operating activities.
5.Use T accounts to prepare a ... Show more content on Helpwriting.net ...
The purpose of the statement of cash flows is to summarize an entity's cash flows from operating, investing, and financing activities during a period.
Because it is concerned with activity for a specific period of time, the statement is similar to the income statement. However, they differ in two
important respects. First, with a few exceptions, the income statement deals only with operating activities. Second, the income statement is on an
accrual basis, while the statement of cash flows reports operating activities on a cash basis.
2.A cash equivalent is an item that is readily convertible to a known amount of cash and has an original maturity of three months or less. These items,
such as Treasury bills and money market funds, present very little risk to the holder, and therefore they are included with cash for the purpose of
preparing the statement of cash flows. That is, purchases and sales of cash equivalents are not considered significant activities to be separately reported
on the statement.

3.The down payment of $20,000 is a cash outflow that would be reported in the investing activities section of the statement of cash flows. The issuance
of the promissory note for $60,000 would appear in a supplemental schedule of noncash investing and financing activities.
4.A 60–day Treasury bill would be classified as a cash equivalent and combined with cash on the balance sheet. Therefore, the purchase of the treasury
bill would not be

Financial Statements And Cash Flows For Each Company
Exploring the Financial Statements The balance sheet, income statement, and statement of cash flows for each company is presented in the Appendix.
Dollar Tree's financial statements are presented in Attachments 2–4 (pages XXX–XXX). Dollar General's financial statements are presented in
Attachments 5–7 (pages XXX–XXX). All calculations described in this current section can be found in Attachment 8 (page XXX). Both Dollar Tree
and Dollar General use U.S. Generally Accepted Accounting Principles(GAAP) to compile their financial statements. Dollar Tree's fiscal year–end is
January 31 whereas Dollar General's fiscal year end is January 30. Dollar Tree and Dollar General have very similar capital structures. At the end of the
fiscal year 2014 (January 31 or 30, 2015), both companies had about 50% liabilities and 50% equity. This represents a debt–to–equity ratio of 1.00.
Dollar Tree: Attachment 2 (page XXX) shows the consolidatedbalance sheet for Dollar Tree. Dollar Tree had a total of $3,567,000 in assets at the fiscal
year–end of 2014; comprised of current assets of $1,994,600 (55.9%) and long–term assets and intangible assets of $1,572,400 (44.1%).
Attachment 8 (page XXX) shows that Dollar Tree had a return on average assets (ROAA) of 18.9% for the fiscal year–end of 2014. ROAA can be
disaggregated into profit margin (profitability) and asset turnover (productivity) ratios. Dollar Tree's profit margin at the fiscal year–end of 2014 was
7.0% and its asset

Financial Statement and Cash Flow Analysis
Chapters 3 and 13 Financial Statement and Cash Flow Analysis Balance Sheet Assets Cash Inventory Accounts Receivable Property Plant Equipment
Liabilities and Shareholder's Equity Accounts Payable Notes Payable Accrued Wages Bank Loans Bonds Common Stock Retained Earnings Total
Liabilities and Shareholder's Equity Total Assets Income Statement Used to figure out how much money we are earning for: (a) (b) (c) (d) vendors,
employees, etc – Cost of Goods Sold, Operating Expenses lenders, bondholders – Interest, government – Taxes, owners/stockholders– Dividends
/Retained Earnings Sales (–) Cost of Goods Sold (–) Operating Expenses (–) Depreciation EBIT (–) Interest EBT (–) Taxes Net Income (–) Dividends
Additions to R/E revenues cost to... Show more content on Helpwriting.net ...
Adds back in noncash items. Net Operating Working Capital = Operating Current Assets– Operating Current Liabilities Operating = those flows from
normal operations Operating Current Assets = Cash, A/R, Inv Operating Current Liabilities = A/P, Accruals Net Operating Profit after Taxes (NOPAT)
= EBIT ( 1 – tax rate ) Free Cash Flow (FCF) = NOPAT– Net investment in operating capital Net investment in operating capital = – change in current
assets (operating) + change in current liabilities (operating) – change in net capital assets Current asset increase represents an investment Current
liability increase represents borrowing Net capital assets = Increase in PPE – Depreciation Market Value Added (MVA) Consistent with shareholder
wealth maximization MVA = market value of common stock– initial value of equity capital example: Google, Inc. Google went public (IPO) on
August 19, 2004 at $85 per share Google stock value on June 16, 2008 was $366.00 Shares Outstanding = 1.2B MVAGOOG = $439.2B– $102B =
$337.2B Economic Value Added (EVA) EVA

Statement of Cash Flows Essay example
Exhibit 1: Alpha Corporation
I. For each of the years on the Statement of Cash Flows:
1. What were the firm's major sources of cash? Sources of cash: Sales of depreciable assets and sales of discontinued operations in 1990 and
increasingly from operating activities, especially related to restructuring and other unusual items.
2. What were the firm's major uses of cash? Cash comes mainly from payment of debt and investments in depreciable assets.
3. Was cash flow from operations greater than or less than net income? Explain in detail the major reasons for the difference between these two
figures. The net income was negative from 1989 to 1991. The net income is negative due to the depreciation costs. Operating ... Show more content on
Helpwriting.net ...
Concluding, this company seems to be in crisis of undergoing a transition phase.
Exhibit 2: Beta Corporation
I. For each of the years on the Statement of Cash Flows:
1. What were the firm's major sources of cash? The main source of cash is A/R. In 1991 the company also gathered $23M issuing stock.
2. Was cash flow from operations greater than or less than net income? Explain in detail the major reasons for the difference between these two
figures. The CFO was higher than net income in 1989 and 1990. In 1991, the CFO is lower than net income due to a considerable increase in
payments for income tax and suppliers and employees.
3. Was the firm able to generate enough cash from operations to pay for all of its capital expenditures? In 1989 and 1990 the firm was able to
generate enough cash flows to cover its capital expenditures. However, in 1991 the firm's capital expenditures were 50% higher than CFO.
4. Did the cash flow from operations cover both the capital expenditures and the firm's dividend payments, if any? I could not pinpoint any dividend

payments in the statement.
5. If it did, how did the firm invest its excess cash? The firm used excess cash to pay off debt in 1990.
6. If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends?

Statement Of Cash Flow Analysis
Statement of Cash Flow Analysis After having analyzed the statement of cash flows from the 2011 and 2012 financial statements, it is clear that Tesu
SZZ d.o.o. is inaccurately recording their assets, liabilities, and shareholders equity. However, their financial stability is not the only issue at hand.
Their net income and net cash flow are both negative, therefore, it is clear that the product of this statement will not have a positive outcome.
The statement of cash flows commences with a negative net income. That, in addition to the increase in accounts receivables during the year, results in
a negative cash flow from operating activities. Although Tesu reduced their inventory by a significantly large amount, held back on their... Show more
content on Helpwriting.net ...
Financial Ratios Analysis In analyzing Tesu SSZ d.o.o., financial ratios were used as a tool to examine their financial statements. The categories of
liquidity, efficiency, solvency and profitability were used, as seen in Exhibit 2. Although there are no industry averages to compare Tesu's financial
ratios against, the two years of data from 2011 and 2012 can be compared against each other to draw conclusions about the current financial situation.
Liquidity
In order to understand how Tesu meets cash requirements quickly, it is necessary to review the current ratio and quick ratio. The higher liquidity is
generally better as it demonstrates that the company can repay its lenders. As seen in Exhibit 2, the current ratio is positive. However, it is
decreasing from 2011 to 2012. Although the quick ratio increased slightly between the two years, it is still not at an acceptable level. The company's
liabilities are greater than their current assets due to the high costs of accounts payable, which has resulted in the low ratio numbers. Currently, Tesu
has a significant sum of money owed in terms of unpaid wages and payroll taxes to the government. In order to increase liquidity, the company must
increase its current assets. Generally acceptable levels for liquidity are 2.0+ for current ratio, and 1.0+ for quick ratio. As Tesu continues to grow in
2013, their current liabilities will begin to go down as they collect outstanding

Cash Flows
Cash Flows
Aleshia Wisch
ACC206: Principles of Accounting II
Prof. Eric Sumners
August 11, 2014
ACC 206 Week Assignment
1. Critical Thinking Question:
Answer the following questions:
Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are
these noncash transactions disclosed?
It is important for a company to show what assets they have on hand that can convert to cash. Non cash transactions are disclosed in the footnotes of the
financial statement of cash flows. "...a company may exchange common stock for land. Such transactions do not trigger a direct inflow or outflow of
cash, but they are nonetheless highly significant ... Show more content on Helpwriting.net ...
The $9,000 loss would be added back to the net income under Operating Activities.
5. Cash flow information: Direct and indirect methods
The comparative year–end balance sheets of Sign Graphics, Inc., revealed the following activity in the company 's current accounts:
20X5
20X4
Increase / Decrease)
Current assets
Cash
$55,400
$35,200

$20,200
Accounts receivable (net)
83,800
88,000
–4,200
Inventory
243,400
233,800
9,600
Prepaid expenses
25,400
24,200
1,200
Current liabilities
Accounts payable
$123,600
$140,600
($17,000)
Taxes payable
43,600
49,200
–5,600
Interest payable
9,000
6,400
2,600
Accrued liabilities
38,800
60,400
–21,600
Note payable
44,000
–

44,000
The accounts payable were for the purchase of merchandise. Prepaid expenses and accrued liabilities relate to the firm 's selling and administrative
expenses. The company 's condensed income statement follows.
SIGN GRAPHICS INC.
Income Statement for the Year Ended December 31, 20x5
Sales
$713,800 Less: Cost of goods sold
323,000 Gross profit
$390,800
Less: Selling & administrative expenses
$186,000
Depreciation expense
17,000
Interest expense
27,000
230,000
Add: gain on sale of land

A Statement Of Cash Flow
STATEMENT OF
CASH FLOWS
Research conducted by Matthew Firth
CONTENTS
What is a statement of cash flowPage 3
What is the purpose of a statement of cash flowPage 3
How does a statement of cash flow effect business managers and shareholders?Page 4
The structure of a statement of cash flow explainedPage 4
How to prepare a statement of cash flow Page 5
Example of a statement of cash flowPage 6
ReferencesPage 7
What is a statement of cash flow?
A statement of cash flow or cash flow statement is a detailed report that provides investors and shareholders with the correct information about cash
inflows and outflows and the resulting change in cash and cash equivalents over a period of time. They are ... Show more content on Helpwriting.net ...
When a statement of cash flow is viewed along with the other financial statements, it provides information that enables users to evaluate the changes in
net assets of an enterprise, its financial structure including its liquidity and solvency and its ability to affect the amounts and timing of cash flows in
order to adapt to changing circumstances and opportunities.
Under the heading, Benefits of Cash Flow Information, the ministry of corporation affairs describes that, "Cash flow information is useful in assessing
the ability of an organization to generate cash and cash equivalents that enables users to develop models to assess and compare the present value of the
future cash flows of different companies" (Benefits of Cash Flow Information, Government of India). As a result of this the cash flow statement
enhances the comparability of the reporting of operating performance by different companies because it eliminates the effects of using different
accounting treatments for the same transactions and events. Consistency in financial statements year over year plays a large part in accounting as it

allows management to easily compare the company's performance.
How does a statement of cash flow effect business managers and stakeholders?
A statement of cash flow is an extremely important financial statement for management or external influencers to continually review. Current or
potential shareholders like to see the liquidity of a

Analyzing Cash Flow Statements to Compare Companies

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