Statement of Cash Flows

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STATEMENT OF CASH FLOWS

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Presentation transcript:

Statement of Cash Flows Format Indirect Method Free cash flow

Business Activities

Statement of Cash Flows For the period ending … Beginning cash $ 10 + Cash flow from operations (not same as Net Income) 90 - Cash flow from investments 20 +/- Cash flow from financing -50 = Ending cash 30

Indirect method: Statement of Cash Flows Cash flow from operating activities Start with net income Adjustments Items on the income statement that do not represent a cash receipt or payment Depreciation Gains or losses on sale of assets Included in cash flow from investments

Indirect method: Statement of Cash Flows Cash flow from operating activities Adjustments Changes in current asset and liability accounts Increase in current assets = Decrease in current assets = Increase in current liabilities = Decrease in current liabilities =

Indirect method: Statement of Cash Flows Cash flow from investing activities Changes in long-term assets Purchase of long-term assets is shown separately from sale of long-term assets Includes gain/loss on sale Plant assets Analyze change in asset and accumulated depreciation See Problem 13-5A

Indirect method: Statement of Cash Flows Cash flow from financing activities Changes in long-term liabilities and owners equity Bonds: issue and repayment on bonds Common stock: issue and repurchase of common stock Payment of dividends

Free Cash Flow Cash flow from operations – dividends – capital expenditures