1 / 10

Chapter 10

Chapter 10. Statement of Cash Flows. Chapter 10: Objectives. Identify the principal uses of the statement of cash flows for financial decision makers. Identify and distinguish among operating, investing, and financing activities. Prepare a statement of cash flows using the indirect method.

cameron-graham
Download Presentation

Chapter 10

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 10 Statement of Cash Flows

  2. Chapter 10: Objectives • Identify the principal uses of the statement of cash flows for financial decision makers. • Identify and distinguish among operating, investing, and financing activities. • Prepare a statement of cash flows using the indirect method. • Interpret cash-flow data by comparatively analyzing the three components of an entity's cash flows. • Compute and interpret cash flow per share. Chapter 10

  3. Three Types of Cash Flows • OPERATING • INVESTING • FINANCING Chapter 10

  4. Operating Activities Operating activities are generally those transactions and events related to the production and delivery of goods and services by businesses. • Inflows include: • Cash sales • Collections of Accounts Receivable • Interest Received • Cash from sales of trading securities • Outflows include: • Payments to suppliers, employees and taxing authorities • Interest Paid Chapter 10

  5. Investing Activities • Making and collecting Loans • Purchase and sale of Property, Plant, & Equipment • Purchase and sale of Long-term Investments in debt and equities Chapter 10

  6. Financing Activities • Borrowing and Repaying Long-term Notes and Bonds • Selling and Repurchasing Stock from Investors • Providing Investors with Dividends Chapter 10

  7. Methods for Reporting Cash Flows from Operations Direct Method: --operating section lists specific cash inflows and outflows from operating activities Indirect Method: --the net cash flow from operating activities is determined by making certain adjustments to net income (More informative) (Reconciliation required by GAAP) Chapter 10

  8. Direct Method Cash flows from operating activities: Receipts from customers $575,043 Payments to suppliers (424,607) Payments to employees (108,646) Payments for insurance (2,428) Receipt of interest on bank savings 3,454 Payments of interest on capital leases (7,273) Payments of income taxes (15,230) Net cash provided by operating activities $20,313 Chapter 10

  9. Indirect Method Cash flows from operating activities: Net Income $61,386 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 29,738 Loss on sale of equipment 460 Increase in Accounts Receivable (24,957) Increase in Inventory (12,684) Decrease in Prepaid Insurance 2,575 Decrease in Accounts Payable (38,405) Increase in Income Taxes Payable 2,200 Net cash provided by operating activities $20,313 Chapter 10

  10. Cash Flow Per Share Net Cash Flow from Operating Activities - Preferred Stock Dividends Weighted Average Number of Shares of Common Stock Outstanding Chapter 10

More Related