Understanding the BusinessPositive cash flows permit a company to . . .PayExpand its operations.owners.Pay dividends to Replace needed assetsTake advantage of market opportunitiesneeded assets.opportunities.Wall Street analysts consider cash flow an important indicator of a company’s 13-2financial health.
Classifications of the Statement of Cash FlowsChCashCurrencyCash EquivalentsShort-term, highly liquid investments.Short term, highly liquid investments.Readily convertible into cash.So near maturity that market value is unaffected by 13-3interest rate changes (i.e., less than 3 months to maturity).
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Classifications of the Statement of Cash FlowsOperatingCash inflows and outflows ditll t d tiOperating Activitiesdirectly related to earnings from normal operations.Investing Acti itiesCash inflows and outflows related to the acquisition or sale of productive facilities and investments in theActivitiesfacilities and investments in the securities of other companies.Financing ActivitiesCash inflows and outflows related to external sources of financing (owners and creditors) for the ti13-4enterprise.