FA2 Module 3能力模块3. Cash Flow Statement University of .pptxVIP

FA2Module 3. Statement of Cash Flow Definition and objectives Classification of elements Direct and indirect methods Gains and losses The T-account method Accounts receivable 1. SCF: Definition and objectives The Statement of Cash Flow (formerly Statement of Changes in Financial Position) shows the changes in Cash and Cash Equivalents arising from the operating, financing and investing activities of the enterprise. This information is useful for: 1. understanding effects of operating, financing and investing activities on cash; 2. assessing liquidity and solvency; and 3. assessing the firm=s ability to generate cash from internal sources. Cash and cash equivalents Cash and cash equivalents include cash, plus temporary investments that are highly liquid (e. g., maturities of three months or less, like treasury bills). Investments in equities are excluded (no maturity date). Bank overdraft can be considered “negative” cash equivalent if bank balance fluctuates regularly between positive and negative. Classification of elementsa. Operating activities Definition Cash flows related to central revenue-generating activities Inflow Examples Cash collected from customers Outflow examples Cash paid to suppliers, salaries, etc., paid Classification of elementsb. Investing activities Definition Cash flows related to acquisition or disposal of long-term assets and non-cash investments Inflow Examples Cash from sale of non-cash-equivalent investments and long-term assets Outflow examples Cash paid for non-cash-equivalent investments, fixed assets Classification of elementsc. Financing activities Definition Cash flows related to debt and shareholders’ equity Inflow Examples Cash from issue of debt and shares Outflow examples Redemption of shares, repayment of debt Classification of elements - Choices Interest paid Operating or Financing Dividends paid Operating or Financing Interest received Operating or Investing Dividends received Operating or Investing Income tax