Cash Flow

affirmation of property Flows

coin Flow

funds menstruate intend the movement of notes funds in and out of a backing. Negative cash flow over a issue of time could mean failure of the business. Positive cash flow implies that the confederacy has enough liquidity to pay dividends to its shareholders, expand its business operations geographically, repurchase shares from current stockholders, replace old assets or buy new ones and take advantage of new grocery store opportunities.

The statement of cash flows is one of the generally accepted fiscal statements used for fiscal reporting. Financial analysts use a companys cash flow statement to gauge its financial health. Cash flow statement focuses on the cash and cash equivalents on the balance sheet. Cash equivalents are short-term investments that after part be readily converted into cash like, marketable securities, exchequer bills, etc. A transaction affecting cash is include in this statement. If a transaction does not affect cash, much(prenominal) as selling goods on account to customers, there is no effect to include on the statement.

Comparative Balance Sheets (current and previous) and the Income Statement are required to prepare the Cash Flow Statement.



Cash Flows can be derived from the balance sheet equation:

Assets = Liabilities + stockholders Equity

Since, cash flow statement focuses only on cash, the above equation can be modified as:

Cash = Liabilities + Stockholders Equity Non Cash Assets

Thus,

Changes in Liabilities
+ Changes in Stockholders Equity
Changes in Noncash Assets
Changes in Cash

Cash flows can occur due to one of the following kindly of business activities:

Operating activities Cash flows from operating activities are cash inflows and outflows directly related to the normal operations of the business. These are the daily expenses and revenues of a company e.g. interest, cost of goods sold, salary, utility expenses etc.

Investing activities Cash flows from investing activities...If you want to get a full essay, show it on our website: Orderessay



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