StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Cash Flow Statement - Essay Example

Comments (1) Cite this document
Summary
Cash flow statement is a statement of inflows (sources) and outflows (uses) of cash and equivalent in an enterprise during a specified period of time. With this view a cash flow statement summarizes the causes of changes in cash positions of a business enterprise between dates of two balance sheets…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94% of users find it useful
Cash Flow Statement
Read TextPreview

Extract of sample "Cash Flow Statement"

CASH FLOW MENT: Cash flow ment is a ment of inflows (sources) and outflows (uses) of cash and equivalent in an enterprise during a specified period of time. With this view a cash flow statement summarizes the causes of changes in cash positions of a business enterprise between dates of two balance sheets. Cash flows exclude movements between the items that constitute cash or cash equivalent because these are part of the cash management of an enterprise rather than part of its operating investing and financing activities.
OBJECTIVES AND USES OF CASH FLOW STATEMENT:
Primary objective of the cash flow statement is to provide information regarding the cash receipts and cash payments of an enterprise for an accounting period. The secondary objective is to disclose information about the operating financing and investing activities of a company during an accounting period. The statement of cash flow gives an indication about the relationship between profitability and cash generating ability and thus the quality of profit earned. In brief, cash flow serves the following purposes:
Helpful in planning and coordination
Helpful in control
Useful in internal financial management
Knowledge of changes in cash position
INDIRECT METHOD:
Under this method cash flow from operating activities is calculated on the basis of net profit as reported in the profit and loss account or balance sheet and is especially used when amount of sales is not given in the question. Few adjustments made under this method are as follows:
Adjustment for non cash and non operating items:
For calculating operating profit before working capital changes, non cash and non operating items (such as depreciation, doubtful debts, dividend, and interest) are added back. The non operating incomes and gains are deducted from the net profit for the year.
Adjustment for changes in current assets and liabilities:
Decrease in current assets and increase in current liabilities is added back and increase in current assets and Decrease in current liabilities is deducted from the operating profit before working capital changes to arrive at cash generated from operations.
Thus under indirect method adjustments are made to net profit where as under direct method individual items of revenue and expenses are adjusted to calculate cash receipts and cash payments.
Adcock Co. for 2007
Net income
2500000
PLUS: Depreciation on plant assets
70000
2570000
PLUS: Loss on sale of plant assets
12000
net cash by operating activities
2582000
References:
1. Eugene F. Brigham Louis C. Gapenski, 1994, 7th edition, Financial Management Theory and Practice.
2. Richard A.Brealey,Stewart C.Myers with the Brattle Group, 2004, Brealey and Myers on Corporate Finance, Financing and Risk Management.
3. Stephen H archer G.marc Choate George Racette 2E Financial Management, 1983 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1534546-cash-flow-statement
(Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 Words)
Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1534546-cash-flow-statement.
“Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1534546-cash-flow-statement.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
ph
philll added comment 1 year ago
Student rated this paper as
This essay was always my weak point. I could never finish it successfully. Still, after I found this particular document, I understood how it should be done. So, I performed my research afterward and completed the essay in several hours, instead of months as it was previously.

CHECK THESE SAMPLES OF Cash Flow Statement

The Chancellor of the Exchequers Budget Statement Claim

...THE BUSINESS ENVIRONMENT The Significant parameters, interalias, on which a indication of the Economic Growth of a country can be assessed are as follows: 1. Rise in GDP Index. 2. Reduction of unemployment Levels. 3. Consumer Expenditure. 4. Increase in Investments. 5. Decrease in Retail Price Index. 6. Decrease in Producer Price Index. 7. Balance of Payment. 8. Balance of Trade In the present context of the Chancellor of the Exchequer’s Budget Statement Claim that Great Britain is entering “the tenth year consecutive year of uninterrupted economic growth” I propose to deal with the subject along the abovementioned lines: Rise in GDP Index: The GDP is a significant index of the UK economic health and provides for a measure...
9 Pages(2250 words)Assignment

The Corrupted Cash Cow for Cops

...Police Details: The Corrupted Cash Cow for Cops English 101 Prof. E. Suffolk December 5th, 2008 Police Details: The Corrupted Cash Cow for Cops You are driving home from work. Almost home, you turn onto a side street. You know this street quite well, as you always take the same route home. A residential area, this street has little traffic and a speed limit of 30 miles per hour. As you drive, you notice the all too familiar signs of road construction. Like most people, once seeing the “construction ahead” sign, as well as the workers and big orange trucks, you step off the gas pedal and begin to slow. In 49 states of the United States, you would also see a civilian or a certified flagger. However, you do not live in those states. Rather...
8 Pages(2000 words)Assignment

CFD Analysis of an Internal Flow

So we can see the complete system, such as cars, airplanes, a block of buildings, etc. It is opposite to an experimental investigation by a material model or prototype of the system, such as an aircraft or car model in a wind tunnel.

The role of CFD in this contemporary technological world is crucial. It assists in the path of the global world of Computer Assisted Engineering or CAE that refers to the ensemble of simulation tools that support the work of engineers between the initial design phase and the final definition of the manufacturing process. The industrial production process uses various software tools for computerization of the whole production cycle. Among those tools, the most important is Computer-Assisted...
6 Pages(1500 words)Report

Foundations of Business Computing: Project Income Statement of Maxs Grocery Mart

... on plagiarism and understand its implication. I can produce a hard copy of this assignment within 24 hours if requested. Executive Summary Max’s Grocery Mart is a family-owned business that has been experiencing a stable growth since its inception. Mr. Leroy Feronti, the owner of the business now wants to expand the business by renovating the grocery mart building with a bank loan. To help the application for bank loan, Mr. Feronti has prepared the pro forma financial statements for three years from 2007 onwards. The data of the accounting period 2006 are taken as the base, upon which the projections for 2007, 2008 and 2009 are based. The bank has demanded to prepare Pro forma Income Statement for three years on the basis of the likely...
8 Pages(2000 words)Assignment

Free Cash Flows Theory

These are not hard and fast rules in determining the capital structure which should best affect a firms value. These theories lay down the benefits and the costs when a firm chooses what it sees as an adequate mix to maximise the shareholders value.

One of the implications where this research can lead include the possibility of the effectiveness in maximising shareholder value by employing two or more theories in capital structure decisions. Because these theories are more conditional by nature, probing which combinations when used for capital structure decisions are more effective in arriving at the goal of maximising firm value can be another subject for further research.
The role of capital structure in increasi...
11 Pages(2750 words)Case Study

Reasons for the Failure of Cash for Clunkers Program

... Reasons for the Failure of Cash for Clunkers Program Introduction The $3 billion “Cash for Clunkers” plan is being hailed in Washington as a great success because so many Americans sought to get a $3,500 to $4,500 check financed by other taxpayers in return for trading in their old car (The Wall Street Journal). But the latest reports show that the Obama program to boost the automotive industrial sector is going to be dead, not due to less popularity, but because of the huge popularity and lack of funds. In November, 2008, U.S. sales for the Toyota, Lexus and Scion brands combined fell 33.9 percent; year-to-date sales were down 13.4 percent in the United States, to about 2.1 million, according to Auto Data Corp. (Henry) Inside the 789...
7 Pages(1750 words)Term Paper

Reflective Statement and Professional Development Action Plan in International Management

...Reflective ment Content Reflective ment Introduction 3 Experience 4 Thought 5 Feeling 6 Reflection 7 Putting theory into practice 8 1. Professional development action plan 9 Overall objective 10 Key area of focus 10 Breaking down of tasks 10 Time schedule 11 Resource identification and methodology 11 Measurement review 12 Reference 13 Reflective statement Introduction I have come from Georgia to UK for my Masters Degree in International Management. I have primarily opted for this stream of management because the study is highly relevant in the contemporary environment of rapid globalization. The world is fast moving towards a multicultural environment...
7 Pages(1750 words)Personal Statement

The Financial Statement Analysis of the Southwest Airlines

...Finance Table of Contents Analysis 3 Comparison with the industry 7 Recommendation 7 Reference 9 Bibliography 12 Annexure- 13 Introduction The financial statements of a company offer an insight into the performance and management of the business affairs. Ratios can be constructed using the annual reports of the company. These ratios can then be used for inter-company comparison to evaluate the performance of the company. It can also be compared with those of the previous years to observe the trend in its performance. The main ratios are liquidity ratio, profitability ratio, leverage ratio and turnover ratio (Washington State University-b, n. d.). Analysis The coverage ratio of the company measures the ability of the company in meeting...
6 Pages(1500 words)Case Study

Corporate Goals and Mission Statement of Apple Organization

Apple inc. (formally Apple Computers Inc.) is a producer, designer and seller of a variety of consumer electronics including personal computers, media devices that include the iPod and iPhone, accessories and peripherals as well as the sales of media and software to support the formerly listed items, including operating systems, music and video applications and various other resources (Freedman & Vohr, 1998).

Apple Inc. is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

Apple Inc. is thought to be among the most highly successful companies established in...
8 Pages(2000 words)Case Study

Technology Flow

Technology flow has been facilitated by increased globalization and thus we can now import new machinery from anywhere in the world.
When productivity increases, companies are able to decrease the prices of their products which helps them gain a competitive advantage. This way other companies are threatened as their sales can decrease and thus their profits.
Therefore using new technology has become a hardcore requirement for every organization in order to compete. Quality of course matters and not just the prices, but with improved methods of production, companies can offer better quality with reduced prices. China is a great example to prove this thing. China with its improved methods and technology along with its chea...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Cash Flow Statement for FREE!

Contact Us