1. Cash Flow Statement
Chapter 21

2. Cash Flow Statement Objectives:
To provide information about:
cash receipts,
cash payments, and
the net change in cash from:
operating, investing, and financing activities

3. Questions the Statement of Cash Flow Answers
Where did the money come from?
Where did it go?
What was the change in the cash balance
What caused the change in the cash balance

4. Format of the Cash Flow Statement
Operating Activities
Investing Activities
Financing Activities
Non-cash Activities

5. Operating Activities Cash received from customers Cash paid for e.g.,
purchase of inventory
Operating expenses
Taxes
interest

6. Operating Activities - ALERT
Some investing or financing cash flows are classified as operating activities. E.g.,
Receipts of investment revenue (interest and dividends) and
Payments of interest to lenders are classified as operating activities because these items are reported in the income statement.

7. Investing Activities Cash received from sale of assets, e.g.:
Land
Investment in stocks or bonds
Cash spent on the purchase of assets:
Building
Stocks or bonds
Property

8. Financing Activities Cash received from Issuance of stocks or bonds
Other borrowings
Cash paid to retire debts or
Repurchase stock
Pay dividends

9. Non-cash Activities Example:
Acquisition of assets in exchange for stock

10. Comparative Cash Flow ExamplesB C
Operations
(50,000)
50,000
Investing
(100,000)
(60,000)
Financing
110,000
(140,000)
40,000
Net CF
(40,000)
30,000
Beg. Cash
End. Cash
10,000
80,000