Midterm4 - = Expense End Prepaid – Beg Prepaid Cash Flows...

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Cash Flows from Operating Activities Cash Inflows: Sale of goods or services (cash from customers) Return on loans (interest), Return on securities(receipts of dividends) Cash Outflows: Payment for inventory (payments to suppliers), Payments to employees, government, interest expense, other expenses CFO: Indirect Method Net Income + Depreciation + Depreciation + Loss on sale of long-term asset - Gain on sale of long-term asset + Decrease in current operating asset other than cash - Increase in current operating asset other than cash + Increase in current operating liability - Decrease in current operating liability CFO: Direct Method Cash Collected From Customers = Sales – Bad Debt Expense – Ending Net AR + Beginning Net AR + End Unearned Rev – Beg Unearned Rev Cash Paid to Suppliers = COGS + End. Inv – Beg. Inv – End AR + Beg AR Cash Paid for Expenses/Payables = Expense – End Payable + Beg Payable Cash Paid for Prepaid Expense
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Unformatted text preview: = Expense + End. Prepaid – Beg. Prepaid Cash Flows from Investing Activities Cash Inflows: Sale of PPE Cash Outflows: Purchase of PPE Cash Received from Sale = Book Value of PPE Sold + Gain(Loss) on Sale Book Value of PPE Sold = Original Cost – Accum. Dep. Cash Flows from Financing Activities Cash Inflows: Issuance of stock, Issuance of bonds, notes, ST/LT borrowings, borrowing cash from creditors Cash Outflows: Payment of dividends, Repurchase of stock, payment of amounts borrowed + Common Stock Issued- Notes Payable Payments- Dividends Paid - Stock Repurchased Analyzing Cash Flows- In the long run, Cash Flows from Operations is higher than Net Income because cash from operations does not include the cost of equipment.- You can inflate Net Income by increasing the value of inventory & AR assets the company can interpret the value of. (AR that is never collected, fake inventory)...
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This note was uploaded on 04/09/2008 for the course ACC FA taught by Professor Bartov during the Spring '08 term at NYU.

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