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Unformatted text preview: Cash Flow Statement Explanations of Numbers Suggestions and Tips Your company's cash flow statement summarizes the company's cash inflows and outflows during each year of operations. The notes to the cash flow statement indicate various aspects of the company's accounting system. This Help page contains explanations of what the cash flow statement numbers mean and how they are calculated. There's a Tips and Suggestion section to guide you in using the Cash Flow Statement information wisely. A section describing two other blocks of data presented just below the Cash Flow Statement winds up the contents of this Help page. Understanding the Numbers in the Cash Flow Statement A brief discussion and explanation of each of the cash flow statement entries is presented below. The first grouping is for the company's annual cash inflows and the second grouping explains the annual cash outflows. Components of Cash Available and Cash Inflows Beginning Cash Balance this amount is always equal to the prior-year ending balance in your company's checking account at the International Bank of Commerce (and the amount always corresponds to the "Cash on Hand" entry shown on your company's balance sheet for the prior year). The ending cash balance in the prior year plainly translates into the beginning cash balance for the upcoming year. Cash Inflows In addition to the beginning cash balance, your company has cash inflows coming from some or all of 6 sources: Receipts from Sales This is usually your company's biggest cash inflow component in the report year. Receipts from footwear sales consist of (1) 25 percent of the sales revenues in the previous year (which were not received from branded and private-label customers until the report year) and (2) 75% of the branded revenues that your company reported this year. Cash inflows from footwear sales do not correspond to calendar year revenues because the company does not immediately receive payment for all of the branded and private-label pairs sold in a given year. As indicated in Note 1 to the Cash Flow Statement, there is an average 90-day delay in receiving the cash for pairs that have been booked as sold. Revenues are booked when the pairs are shipped from the distribution warehouses, but, on average, the cash received from these sales does not become available for company use until 90 days later. Bank Loans All of the money your company borrowed in the report year via 1-year, 5-year, and 10-year loans constitutes a cash inflow because the monies are available for funding cash outlays in the year the loans are taken out. Stock Issues If you and your co-managers elected to raise additional equity capital by issuing additional shares of common stock in the report year, then the full amount of the proceeds are available for use in the year the stock is issued....
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- Winter '10