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Discuss: The importance of Cash Economic and Financial Crisis
Cash Flow Statement and its purpose
Understand the differences: FASB and IFRS
Prepare comprehensive Cash Flow Statement (Comprehensive Illustration)
Prepare the presentation & disclosures.
the survival, growth and profitability of the business
STRATEGIC DECISIONAssess the financial health of a business
Investors Shareholders Creditors Employees Managers/owners: warning signs
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Define Cash (Cash and Cash Equivalent) Highly liquid, Short-Term investments
(money market funds), Treasury bills, commercial paper
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PRIMARY ELEMENTS OF THE CASH FLOWS Reports: cash inflows and outflows
INVESTING ACTIVITIES long-term assets
investment
FINANCING ACTIVITIES
OPERATING ACTIVITIES core of the business
=
NET INCREASE (DECREASE) IN CASH
long-term debt and equity
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FASB 95 Interest payments (operating ) Interest/dividends received (operating) Dividends paid (financing )
IAS 7 IAS 7 Classification of Cash Flow same
except: Research…… DIFFERENCES: Classification
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FASB Identifies two methods:The indirect method derives cash flows
from accrual basis statements. (also called reconciliation method)
The direct method determines cash flows directly for each source or use of cash.
Difference…. OPERATING ACTIVITIES ONLY
Preparing Comprehensive Cash Flow StatementIllustration… Additional consideration:
Bonds payable Discount/premium on bonds payable Convertible bonds Retirement of bonds
Stock: Preferred/common Convertible preferred Treasury Stock
Dividends Cash/stock dividends Deferred Tax Lease Pension Investment: using equity method
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