Chapter 5 Notes

Chapter 5 Notes - Chapter 5 Statement of Cash Flows a...

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Unformatted text preview: Chapter 5 Statement of Cash Flows a financial statement that shows the amount of cash collected and paid out by a firm over an accounting period for operating activities, investing activities, and financing activities Cash Flows from Operating Activities Cash Flows from Investing Activities- see yellow chapter 5 handout Cash Flows from Financing Activities Preparing the statement of Cash Flows:- Indirect Method: a method of calculating cash flows from operating activities in which net income is adjusted for items that do not affect cash flows- Direct Method: a method of determining cash flows from operating activities in which each item on the income statement is converted from an accrual basis to a cash basis * The direct method is not as common as the indirect method. * See Yellow Handout Cash Debt Coverage Ratio measures a firms ability to repay both its short-term and long-term debt Cash Dividend Coverage Ratio measures the ability of a firm to pay dividends at the current...
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Chapter 5 Notes - Chapter 5 Statement of Cash Flows a...

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