Lecture09 - Lecture 9 Statement of Cash Flows and Cash Flow...

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1 Lecture 9 Statement of Cash Flows and Cash Flow Analysis
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2 Review Getting from Net Income to Cash Flow from Operations (CFFO) requires: Adding depreciation and amortization (D&A) Add other non-cash expenses (bad debt expense, provision for excess and obsolete inventory) Adding decreases in A/R and Inventory Add decreases in other current assets (pre-paid expenses, deferred tax assets) Adding increases in A/P Add increases in other current liabilities (accrued compensation, deferred revenue, taxes payable) Adding non-cash losses and charges Restructuring charges, asset impairments, write-downs, losses from discontinued operations, dispositions Vice versa if the balance sheet accounts change in the other direction
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3 Today Further analysis of the main working capital accounts (A/R, Inv., A/P) that can affect cash flows quite a bit – How much cash did the A/R department collect from customers? On average, how many days did it take to collect the cash? – How much new inventory did the inventory manager purchase? On average, how many “days of inventory” do we have? – How much cash did the A/P department spend to pay for the inventory purchases? On average, how many days does it take for us to pay our suppliers?
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4 T-Accounts Use of T-Accounts may help in the calculations – Balance sheet T-Accounts: Cash, A/R, Inventory, A/P, Retained Earnings – Income statement T-Accounts: Sales, COGS
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5 URBAN OUTFITTERS, INC.
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