Cash Flow Statement Ch 5
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Transcript of Cash Flow Statement Ch 5
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 1/13
Dr.Smita Sahoo
Cash Flow StatementAS-3
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 2/13
Dr.Smita Sahoo
Purpose of Cash Flow Statement
Pr ovide infor mation about cash r ecei pts and
payments dur ing an accounting per iod
Hel ps us to see how financial position
changes dur ing an accounting per iod
Only statement that collects and shows in
one statement the causes of changes in cash
dur ing a financial r e por ting per iod
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 3/13
Dr.Smita Sahoo
Cash and Cash Equivalents
Cash includes curr ency on hand and demand
de posits
Cash equivalents ar e shor t-ter m, highly liquidinvestments that ar e
Readily conver tible to known amounts of
cash
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 4/13
Dr.Smita Sahoo
O per ating
Activities
Investing
Activities
Financing
Activities
Classification of Cash Receipts &
Cash Payments
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 5/13
Dr.Smita Sahoo
O per ating Activities
Operating activities are the principal revenue-
producing activities of the enterprise .
Tr ansactions that gener ally involve pr oducing anddeliver ing goods and pr oviding ser vices
Inflows
selling goods and ser vices, Recei pts f r om debtor s etc.
Outflows
Pur chase of RM, salar y ex p, Other o per ating ex p.
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 6/13
Dr.Smita Sahoo
Investing Activities
I nvesting activities are the acquisition and disposal
of long-term assets and other investments not
inclu
ded in cash equ
ivalents. Inflows
Selling of fixed assets and mar ketable secur ities,
r eceiving dividend on investments etc.
Outflows
pur chasing fixed assets, mar ketable secur ities etc.
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 7/13
Dr.Smita Sahoo
Financing Activities
F inancing activities are activities that result in
changes in the size and composition of the
owners¶ capital and borrowings of theenterprise.
Inflows
Issuing shar es, debentur es, and long-ter m borr owing
Outflows
Re payment of Long-ter m loans, r edem ption of
Debentur es, payment of dividend & inter est etc.
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 8/13
Dr.Smita Sahoo
Basic Interpr etation of
Statement of Cash Flows Over all, how successf ul has management been in
gener ating and investing cash flows?
How does accrual basis net income com par e with cash basis?
What cash uses have been made for investing activities,
and to what extent has cash f r om o per ations been
sufficient to pay for these investments?
What sour ces and uses have been gener ated f r om
financing activities?
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 9/13
Dr.Smita Sahoo
Dir ect ver sus Indir ect Method for
O per ating Activities
Dir ect shows major classes of gr oss cash
r ecei pts and cash payments
Differ ence is net cash pr ovided by,
used in, o per ating activities
Indir ect star ts with net income (loss) and
adjusts for r evenues and ex penses that did
not cause changes in cash
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 11/13
Dr.Smita Sahoo
Indirect Method of Cash Flow Statement
B) Cash Flows from Investing Activities
Pur chase of Fixed Assets
Pr oceeds f r om sale of Fixed AssetsInter est & Dividend r eceived on
investment out side the business
Net cash from investing activities (B)
Rs.
(XXX)
XXX
XXX
Rs.
XXX
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 12/13
Dr.Smita Sahoo
Indirect Method of Cash Flow Statement
C) Cash flows from Financing activities
Pr oceeds f r om issuance of shar e ca pital
Pr oceeds f r om long-ter m borr owingsRe payment of long-ter m borr owings
Inter est & Dividend paid
Net cash from financing activities (C)
NETCASH FLOW(A+B+C)
Add: Cash and cash equivalents at beginning
of period
Cash and cash equivalents at end of period
Rs.
XXX
XXX
(XXX)
(XXX)
Rs.
XXX
XXX
XXX
xxx
8/8/2019 Cash Flow Statement Ch 5
http://slidepdf.com/reader/full/cash-flow-statement-ch-5 13/13
Dr.Smita Sahoo
Direct Method of Cash Flow Statement
A) Cash Flows from Operating Activities
Cash sales
Cash collected f r om customer s/debtor s
Cash pur chases
Cash paid to supplier s/ cr editor s and
em ployees
Cash paid for o per ating ex p. Cash generated from operations
Income Tax paid
Net cash from operating activities (A)
Rs.
XXX
XXX
(XXX)
(XXX)
(XXX)XXX
(XXX)
Rs.
XXX