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Unformatted text preview: Buying treasury stock will decrease OE: • Co. wants ROE to be good so they buy treasury stock to decrease OE • Indirect approach (only concerns operating): o Start w/ NI o List of adjustments • Direct approach: o Preferred by banks giving loans o Not preferred by co. management though o Ex. why, in 2009, is Xerox not spending excess cash from operating on investing and financing? Not a ton of answers, but many questions • To create SCF: o B/S w/ 2 years information and I/S w/ 1 year needed o From B/S: Calculate change from year-to-year What activity does it go in (operating?, investing?, financing?) Things labeled cash: • All O,I,F changes should add up to the “cash” changes • Make SCF common-size: o Put all inflows together o Put all outflows together For operations, only put one-line (the final total/ bottom line)...
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- Spring '11
- Bowen
- Cash Flow Statement, Corporate Finance, Generally Accepted Accounting Principles
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