Statement of Cash Flows

The statement of cash flows lists a company’s cash inflows and cash outflows. It classifies the cash flows as operating, investing, or financing activities.

Financial Statements

1. Income Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows

Statement of Cash Flows

CF from Operating Activities 2 CF from Investing Activities 3 CF from Financing Activities Net Cash Flow  

Non-cash transactions are disclosed at the bottom of the statement Operating Activities  providing goods and services to customers  paying expenses related to generating income Noncash items excluded from operating activities:   depreciation, amortization, gains and losses on sale of assets Two formats to present operating activities: 1 Direct Method Cash receipts minus Cash payments Cash received:  from customers, for interest or dividends Cash paid:  to suppliers, to employees, for interest, taxes 2 Indirect Method Net Income +/- adjustments

Investing Activities  buying or selling long-term assets. Cash received: from sale of businesses, plant assets, intangibles, and investments Cash paid: to buy businesses, plant assets, intangibles, and investments

Financing Activities long-term debt and stockholders’ equity except for interest payments. Cash received: issuing stock or treasury stock, borrowing money Cash paid: paying dividends, buying back stock (treasury stock), repayment of debt