财务基础知识4.pptxVIP

Cash Flow Statement and Financial Statement Analysis Learning Objectives : Develop an ability to prepare a statement of cash flows using Direct Method and Develop skills to analyze profitability and riskDiscussion Section # 4Financial Reporting - E202Lopo Martinez 1 Operation ActivitiesCash Flow from Operations Cash payments for operationsCash receipts from operationsNet incomeAdjustments for non-cash revenues and expensesAdjustments for receivables, inventories, payables, other current assets/liabilitiesCash flow from operationsLessPlus/LessPlus/LessEqualsEqualsDirect MethodIndirect Method Can be computed two ways:Obtained from cash receipts journal.Obtained from accrual sales information.Cash received from customers Direct MethodCash Received from Customers=Sales{- increase A/R+ decrease A/R{+ increase Un. Rev.- decrease Un. Rev=Sales- D A/R+ D Un. RevenueCash receivedfrom customersSo to compute Cash Received from Customers : Step 1Step 2 Purchases =COGS{+ Increase in inventory - Decrease in inventoryCash paid for merchandise =Purchases{- Increase in A/P + Decrease in A/PDirect MethodCash Paid for Merchandise=COGS+ D INV- D A/PCash paid formerchandiseSo to compute Cash Paid for Merchandise : The cash paid for wages and other operating expenses is affected by(1) whether the expense was accrued (W/P, Rents Payable), and(2) whether the expense was prepaid (Prepaid Wages, Prepaid Rents) {{Cash paid for wages and other operating expenses =Wages and other operating expenses - Increase in accrued liabilities + Decrease in accrued liabilities + Increase in prepaid expenses - Decrease in prepaid expensesDirect MethodWages and Operating Expenses=Wagesand otheroperatingexpenses- D W/P+ D Pr.WagesCash paid forWages and Other OperatingExpenses- D Rent Payable- D Insur.Payable+ D Pr.Rent+ D Pr.Insur.So to compute Cash Paid to Employees and other Operating Expenses : Cash paid for interest =Interest Expense+ Decreasein