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Working capital accounts current assets and current

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Unformatted text preview: pital Accounts Current Assets and Current Liabilities Assets and Liabilities typically converted to cash or paid over Assets the business cycle the Long-Term Debt Owner’s Accounts Snapshot of company at a specific point in time Three Financial Statements Three Statement of Cash Flow or Sources and Uses of Statement Cash Cash Cash flow from business operations Cash flow from financing From Owners (residual claims) From Lenders (fixed claims) Cash flow for capital spending Purchase of capital equipment Recapture cash from sale of assets Ties to the change in Cash Account over the Ties period period Fundamental Accounting Relationship Relationship Accounting Identity in two forms Assets ≡ Liabilities + Owner’s Equity Assets Liabilities Cash Flow from Assets ≡ Cash Flow to Cash Creditors + Cash Flow to Owners Creditors Building the Cash Flow Identity Cash Flow from Assets = Operating Cash Cash Flow – Increases in Net Working Capital – Increases in Capital Spending Increases Work through components, pages 269-271 Fundamental Accounting Relationship Relationship Continued Building the Cash Flow Identity Cash Flow to Creditors Interest paid on debt – shows up in this section not Interest in operating cash flow in Any repayment of principal on debt claims Cash Flow to Owners Dividend Payments Any retirement of common stock Increases in debt or common stock are Increases cash flow from owners or creditors cash Cash...
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