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lecture12_student - Statement Chapter13 Understanding Pay...

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Statement of Cash Flows Chapter 13
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Understanding the Business Positive cash flows permit a company to . . . Pay Expand its operations. owners. Pay dividends to Replace needed assets Take advantage of market opportunities needed assets. opportunities. Wall Street analysts consider cash flow an important indicator of a company’s 13-2 financial health.
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Classifications of the Statement of Cash Flows C h Cash Currency Cash Equivalents Short-term, highly liquid investments. Short term, highly liquid investments. Readily convertible into cash. So near maturity that market value is unaffected by 13-3 interest rate changes (i.e., less than 3 months to maturity).
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Classifications of the Statement of Cash Flows Operating Cash inflows and outflows di tl l t d t i Operating Activities directly related to earnings from normal operations. Investing Acti ities Cash inflows and outflows related to the acquisition or sale of productive facilities and investments in the Activities facilities and investments in the securities of other companies. Financing Activities Cash inflows and outflows related to external sources of financing (owners and creditors) for the t i 13-4 enterprise.
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