This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ns of the statement of cash flows? How is this information useful?
■Is it important for a company to report net cash inflows (positive amounts) relating to operating activities over the longer term? What are the implications if operating cash flows are negative for an extended period of time?
©Cambridge Business Publishers, 2013 Initial Questions about the Statement of Cash Flows continued
■Why is it important to know the composition of a company’s investment activities? What kind of information might we look for? Are positive investing cash flows favorable?
■Is it important to know the sources of a company’s financing activities? What questions might that information help us answer?
■How might the composition of operating, investing and financing cash flows change over a company’s life cycle?
■Is the bottom line increase in cash flow the key number? Why or why not? ©Cambridge Business Publishers, 2013 Financial Statement Linkages The income statement and the balance sheet are linked via retained earnings. Retained earnings, contributed capital, and other equity balances appear both on the statement of stockholders’ equity and the balance sheet.
The statement of cash flows is linked to the income statement as net income is a component of operating cash flow. ©Cambridge Business Publishers, 2013 Financial Statement Li...
View Full Document
- Spring '12