Ch. 12 - 12-1Click to edit Master subtitle styleChapter...

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Unformatted text preview: 12-1Click to edit Master subtitle styleChapter 12Reporting andInterpreting the Statementof Cash Flows12-2Learning Objective 1Identify cash flows arising from operating, investing, and financing activities.12-3The Statement of Cash FlowsnHelps investors determine how a company obtains its cash and how the company uses its cash.nFor example, did the company generate cash….qfrom normal operating activities?qfrom borrowing?qfrom issuing stock?qfrom selling long-lived assets?12-4The Statement of Cash FlowsnDid the company use cash to:qPay for normal operating activities?qPay its debts?qPurchase long-lived assets?qPay dividends?qRe-purchase shares?12-5The Statement of Cash FlowsnExplains the change in a company’s cash balance from the beginning of the period to the end of the period.nHelps investors answer questions such as:qDoes the company have enough cash to pay its short-term debts?qDoes it have enough cash to pay for normal operating activities or will it have to borrow?qDoes the company adequately manage its accounts receivable?12-6What is “Cash”?nCurrency on handnChecking accounts, savings accounts & certain money market accountsnCash EquivalentsqHighly liquid short-term investments within 3 months of maturityqEasily converted to cashqLow riskqExamples: Treasury Bills and Commercial PaperO bj1 0O bj1 0 112-7Classifying Cash FlowsnThree Basic Sections in Statement of Cash Flows:qOperating ActivitiesqInvesting ActivitiesqFinancing Activities12-8Classifying Cash FlowsIn thousands for year endedDecember 29, 2007Net cash provided by (used for) operating activities53,794$ + (-) Net cash provided by (used for) investing activities(37,109)+ (-) Net cash provided by (used for) financing activities(543)Net increase (decrease) in cash16,142Cash and cash equivalents at beginning of period63,147Cash and cash equivalents at end of period79,289$ The Boston Beer Company, Inc. and SubsidiariesCondensed Statement of Cash flows12-9Cash inflows and outflows that directly relate to revenues and expenses reported on the income statement.Operating Activities12-10Cash Flows from Operating ActivitiesInflowsfrom:lSales to customers.lInterest and dividends received.+Outflowsto:lPurchase inventory and services.lSalaries and wages.lRent, insurance, utilities, etc.lIncome taxes.lInterest on liabilities._Operating Activities12-11Cash Flows from Investing Activities+Inflowsfrom:nSale or disposal of property, plant, and equipment.nSale or maturity of investments in securities._Outflowsto:lPurchase property, plant, and equipment.lPurchase investments in securities.Investing Activities12-12Cash Flows from Financing Activities+Inflowsfrom:nBorrowing on long term debt (such as notes) from creditors....
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Ch. 12 - 12-1Click to edit Master subtitle styleChapter...

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