Chapter 12 -powerpoint-Class

Chapter 12 -powerpoint-Class - CHAPTER 12 Reporting and...

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C H A P T E R 12 Reporting and Analyzing Cash Flows
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Four Basic Financial Statements Income Statement Statement of Retained Earnings Balance Sheet Cash Flow Statement
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How does a company obtain its cash? INFLOWS Where does a company spend its cash? OUTFLOWS What explains the change in the cash balance? INCREASE/DECREASE FROM PREVIOUS PERIOD Purpose of the Statement of Cash Flows
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How did the business fund its operations? Did the business borrow any funds or repay any loans? Does the business have sufficient cash to pay its debts as they mature? Did the business make any dividend payments? Importance of Cash Flows
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Cash Currency Cash Equivalents Short-term, highly liquid investments. Readily convertible into cash. So near maturity that market value is unaffected by interest rate changes. Measurement of Cash Flows
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The Statement of Cash Flows includes the following three sections: Operating Activities Investing Activities Financing Activities Classifying Cash Flows
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The Flow of Cash Cash paid for operating activities Cash paid for investing activities Cash paid for financing activities outflows Cash received from operating activities Cash received from investing activities Cash received from financing activities Cash and cash equivalents inflows
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Cash flows from operating activities: [List of individual inflows and outflows] Net cash provided (used) by operating activites $ ##### Cash flows from investing activities: [List of individual inflows and outflows] Net cash provided (used) by investing activites ##### Cash flows from financing activities: [List of individual inflows and outflows] Net cash provided (used) by financing activites ##### Net increase (decrease) in cash $ ##### Cash (and equivalents) balance at beginning of period ##### Cash (and equivalents) balance at end of period $ ##### Company Name Statement of Cash Flows For Period Ended Date Format of the Statement of Cash Flows
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Cash Inflow Sale of goods or services Sale of investments in trading securities Interest revenue Dividend revenue Cash Outflow Payments for Inventory Purchase of trading securities Interest payments Wages, rent, taxes, utilities, insurance What Items Are Classified as Operating Activities?
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Investing Activities Cash Inflow Sale of plant assets Sale of securities, other than trading securities Collection of principal on loans Cash Outflow Purchase of plant assets Purchase of securities, other than trading securities Lending Cash to other entities
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Cash Inflow Issuance of own stock (preferred or common stock) Issuance of bonds Borrowing funds (Notes Payable) Reissuance of Cash Outflow Dividend payments Repaying principal on borrowing Treasury stock purchase Financing Activities
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Examples: Retirement of debt by issuing equity securities. Conversion of preferred stock to common stock.
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Chapter 12 -powerpoint-Class - CHAPTER 12 Reporting and...

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