ECON122 - Final Exam Review

ECON122 - Final Exam Review - Statement of cash flows Shows...

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Statement of cash flows Shows where cash came from (cash receipts) and where it’s spent (cash payments) Shows why Net Income does not equal change in Cash Balance Purpose o Predict future cash flows o Evaluate Management Decisions o Predict ability to pay debts and dividends Sections o Operating Activities (day to day operations) Revenues, expenses, gains and losses Affect Net Income Affect Current Assets and Current Liabilities o Investing Activities Increase and decrease Long Term Assets Purchases and sales of Long Term Assets Loans Receivables and collection of LR o Financing Activities Increase and decrease Long Term Liabilities and Equity Issuing stock, paying dividends, buying and selling treasury stock Borrowing money and paying off loans Indirect Method – start with Net Income, adjust to Net Cash from Operating Activities Financial System Analysis Horizontal – year-to-year comparison of a company’s performance, shows percentage change Vertical – relationship of each item to its base amount (100%) o VA% = Each Income Statement-Item / Revenues (net sales) x 100
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This note was uploaded on 08/28/2011 for the course ECON 122 taught by Professor Suzannemedicus during the Fall '10 term at UMBC.

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ECON122 - Final Exam Review - Statement of cash flows Shows...

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