Derivation of the Statement of Cash Flows from the Cash Flow Identity2

Derivation of the Statement of Cash Flows from the Cash Flow Identity2

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Derivation of the Statement of Cash Flows from the Cash Flow Identity (1) Cash flow from assets = Cash flow to creditors + Cash flow to stockholders (2) Operating cash flow - Net cap. spending - NWC = (Int. paid - Net new borrowing) + (Div. paid - Net new equity raised) (3) (EBIT + Deprec. - Taxes) - Net cap. spending - (End. NWC - Beg. NWC) = [Int. paid - (End. debt - Beg. debt)] + [Div. paid - (End. com. stock - Beg. com. stock)], where Net cap. spending = End. net fixed assets - (Beg. net fixed assets - Deprec.) (4) EBIT + Deprec. - Taxes - Net cap. spending - [(End. Cash + End. AR + End. Inv. - End AP) - (Beg. Cash + Beg. AR + Beg. Inv. - Beg. AP)] = Int. paid - Debt + Div. paid - Com. stock (5) EBIT + Deprec. - Taxes - Net cap. spending - [(End. Cash - Beg. Cash) + (End. AR - Beg. AR) + (End. Inv. - Beg. Inv)
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Unformatted text preview: - (End. AP - Beg. AP)] = Int. paid - Debt + Div. paid - Com. stock (6) EBIT + Deprec. - Taxes - Net cap. spending - Cash - AR - Inv. + AP = Int. paid - Debt + Div. paid - Com. stock (7) (EBIT - Int. paid - Taxes) + Deprec. + AP - AR - Inv. - Net cap. spending + Debt + Com. stock - Div. paid = Cash (8) Net income + Deprec. + AP - AR - Inv. - Net cap. spending + Debt + Com. stock - Div. paid = Cash Cash flow from Cash flow from Cash flow from Operating Activities Investment Activities Financing Activities...
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This note was uploaded on 08/22/2009 for the course FIN 3310 taught by Professor Potts during the Spring '08 term at Baylor.

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