CIMA-CO2课程PPT(16).ppt

,STATEMENT OF CASH FLOWS,Chapter 24,Provides information about the cash receipts and cash payments of a business entity during the accounting period. -Indicator of Cos liquidity and solvency,Helps investors with questions about the companys: Ability to generate positive cash flows. Ability to meet its obligations and to pay dividends. Need for external financing. Investing and financing transactions for the period.,Purpose of the Statement of Cash Flows,Cash Equivalents,Cash,Currency,Short-term, highly liquid investments. (3 months) Readily convertible into cash. So near maturity that market value is unaffected by interest rate changes.,Cash and Cash Equivalents,The Statement of Cash Flows must include the following three sections: Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities,Classification of Cash Flows,Outflows to: Suppliers of merchandise and services. Employees. Interest paid. Income tax paid.,Inflows from: Sales to customers.,Cash Flows from Operating Activities,Operating Activities,Cash Flows from Investing Activities,Inflows from: Proceeds on sale of non-fixed assets Interest received Dividends received,Outflows to: Purchase of non-fixed assets,Investing Activities,Inflows from: Proceeds from issuing shares Proceeds from loans,Outflows to: Repayment of loans Payment of dividends,Financing Activities,Cash Flows from Financing Activities,The operating cash flows section can be prepared using either the direct method or the indirect method.,Lets look at the Direct Method for preparing the Statement of Cash Flows.,Accrual basis revenue includes sales that did not result in cash inflows. Can be computed as:,Cash Received from Customers,Decrease in receivables,Increase in receivables,+,=,=,Net Sales,Direct Method Cash Received from Customers,+,=,=,The A/R balance was $80,000 on 12/31/02 and $110,000 on 12/31/03. If accrual sales revenue for 2003 was $900,000, what was cash basis revenue?,Decrease in receivables,Increase in receivables,Net Sales $900,000,Direct Method Cash Received from Customers,Cash Received from Customers,Cash Received from Customers = $870,000,Decrease in receivables,$30,000 Increase in receivables,=,Net Sales $900,000,The A/R balance was $80,000 on 12/31/02 and $110,000 on 12/31/03. If accrual sales revenue for 2003 was $900,000, what was cash basis revenue?,Direct Method Cash Received from Customers,Now that we understand the process, lets look at some simplified formulas for computing direct method cash flows.,Direct Method Interest and Dividends Received,Step 1 Step 2,Direct Method Cash Paid for Merchandise,How much did Lug Lite pay for inventory in 2003? a. $900,000 b. $923,000 c. $947,000 d. $877,000,Direct Method Cash Paid for Merchandise,Purchases for 2003 were $935,000. Purchases = $900,000 + $35,000 Cash Paid for Merchandise in 2003 was $923,000. Cash Paid = $935,000 - $12,000,After deducting depreciation and other noncash expenses, the cash paid for expenses is affected by (1) whether the expense was prepaid, and (2) whether the expense was accrued.,Direct Method Cash Payments for Expenses,Lets look at the Indirect Method that is used by over 97% of all companies.,Net Profit,Cash Flows from Operating Activities,Indirect Method,Changes in current assets and current liabilities as shown on the following table.,+ Losses and - Gains,+ Noncash expenses such as depreciation and amortization.,Use this table when adjusting Net Profit to Operating Cash Flows.,Indirect Method,Lets prepare a complete Statement of Cash Flows using the Indirect Method.,Statements of Comprehensive Income,Sales x Cost of Sales (x) Gross profit/(loss) x Other operating income x x Selling and distribution expense (x) Administration expense (x) Operating profit x Interest received x Interest paid (x) Profit before tax x Income tax (x) Profit for the period x Other comprehensive income Gain on property revaluation net of tax x Total comprehensive income for the period x,Format Statement of Cash Flow,Cash Flows from operating activities Operating profit x Adjustments for Depreciation x (Profit)/Loss on sale of non-current assets x Working capital adjustments (Increase)/decrease in receivables x Increase/(decrease) in payables x (Increase)/decrease in inventories x Cash generated from operations x (Interest paid) x (Tax paid) x,x,Format Statement of Cash Flow,Cash flows from investing activities (purchase of non-current assets) x Proceeds on sale of non-current assets x Interest received x Dividends received x Cash flows from financing activities Proceeds from issue of shares x Proceeds from loans x (Repayment of loans) x (Payment