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INTRODUCTION

CASH FLOW
WHAT DOES CASH FLOW MEAN?
1. A revenue or expense stream that changes a cash account over a given period..
2. An accounting statement called the "statement of cash flows", which shows
the amount of cash generated and used by a company in a given period.
Cash flow is..
Cash flow can e.g. be used for calculating parameters
!o determine a pro"ect#s rate of return or value.
!o determine problems with a business#s li$uidity.
As an alternate measure of a business#s profits when it is believed that
accrual accounting concepts do not represent economic realities.
Cash flow can be used to evaluate the #$uality# of %ncome generated by
accrual accounting.
!o evaluate the ris&s within a financial product.
Cash flow is a generic term used differently depending on the context.
'!A!()(*! +, CA'- ,.+/ %* A 01'%*(''2' ,%*A*C%A.'
1. +perational cash flows .
2. %nvestment cash flows
3. ,inancing cash flows
WAY COMPANIES CAN AUGMENT REPORTED CASH FLOW
Common methods include
CASH FLOW STATEMENT
!he oficial name for the cash flow statement is the statement of cash flows.
!he cash flow statement reports the cash generated .
!he cash flow statement organi3es and reports the cash generated and used in
the following categories
1 +perating activities
2 %nvesting activities
4 ,inancing activities
5 'upplemental information
!hen, we can the following general assumptions
/hen an asset 6other than cash7 increases, the Cash account
/hen an asset 6other than cash7 decreases, the Cash account ...
/hen a liability decreases, the Cash account
/hen owner8s e$uity increases, the Cash account .
/hen owner8s e$uity decreases, the Cash account ..
.oo& at the chart below. %t shows where the changes in balance sheet accounts
should be entered on your statement of cash flows
A change in this balance
sheet category
Current Assets9
Current .iabilities
.ong2term Assets
.ong2term .iabilities
'toc&holder8s ($uity
STOCKHOLDERS CASH FLOW
TECHNICAL TERMS:
Statement of a!" F#o$!
O%e&at'n( a!" f#o$!
In)e!tement a!" f#o$!
F'nan'n( a!" f#o$!
So*&e! of a!"
U!e of a!"
.Co.
Statement of Ca!" F#o$!
,or the )onth (nded , 2:..
O%e&at'n( At')'t'e!
*et %ncome
%ncrease in %nventory
Cash ;rovided 61sed7 in +perating Activities
In)e!t'n( At')'t'e!
F'nan'n( At')'t'e!
%nvestment by +wner
*et %ncrease in Cash
Cash at the beginning of the month
Cash at the end of the month
(<;.A*A!%+* +, !-( !%)(!A0.(
Fe+&*a&, t&an!at'on! an- f'nan'a# !tatement!
Co.
%ncome 'tatement
,or the )onth (nded ,eb. .. 2:.
=evenues > ..
(xpenses
*et %ncome > .
CASH FLOW .OCA/ULARY
E0ERCISE