Kế toán, kiểm toán - Chapter 19: Company performance: cash flows

Chapter 19Company Performance: Cash FlowsCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin19-*Why Do We Need a Statement of Cash Flows?Assess ability to generate future cashAssess ability to meet obligations and pay dividendsUnderstand the difference between net income and cash flowsUnderstand cash and noncash investing and financing activities19-*What are the Sections of the Statement of Cash Flows?Operating activitiesRelating revenues and expenses to current, operating assets and current, operating liabilitiesInvesting activitiesBuying and selling long-term and other investment assetsFinancing activitiesIssuing and retiring long-term and other financing liabilities and owners’ equity19-*How Do We Determine Operating Cash Flows—Direct?Revenues versus cash inflowsAnalyze current, operating assets and current, operating liabilities related to revenues to determine cash inflowsExpenses versus cash outflowsAnalyze current, operating assets and current, operating liabilities related to expenses to determine cash outflowsRevenues and cash inflowsIf a revenue does not have a related balance sheet account, we assume the revenue was received in cashExpenses and cash outflowsIf an expense (excluding noncash expenses) does not have a related balance sheet account, we assume the expense was paid in cash19-*How Do We Determine Operating Cash Flows—Indirect?Adjust net income for noncash expensesAdd back depreciation, amortization, and depletion expenseAdjust net income for nonoperating itemsAdd back lossesSubtract out gainsAdjust net income for changes in current, operating accounts19-*How Do We Adjust Net Income for Changes in Current, Operating Accounts?Changes in current, operating assetsIf the asset increases, subtract the changeIf the asset decreases, add the changeChanges in current, operating liabilitiesIf the liability increases, add the changeIf the liability decreases, subtract the change19-*How Do We Determine Cash Flows from Investing Activities?Analyze long-term assets for purchases and salesAnalyze current, nonoperating assets for purchases and salesAnalyze the income statement for gains and losses to determine cash flows from sales19-*How Do We Determine Cash Flows from Financing Activities?Analyze long-term liabilities for issuances and retirements of debtAnalyze owners’ equity accounts for issuances and retirements of stockAnalyze retained earnings for dividend declarationsAnalyze current, nonoperating liabilities for issuances of debt or declarations of dividends and retirements of debt or payment of dividends19-*What Other Items are Disclosed on the Statement of Cash Flows?Investing and financing activities not requiring cashSignificantFuture cash flow implications19-*How Do We Evaluate Cash Flows Internally?Cash flow per shareComparison to pastComparison to competitors