Cash Flow From Investing Activities

What Is Cash Flow From Investing Activities? Cash flow from investing activities typically refers to cash generated in a company by making or selling investments and/or earning from it. Cash flow from investing activities is a major component of cash flow statement which is one of the four annual financial statements that are prepared by … Read more

Cash Flow Statement: Practical Problems and Solutions

These problems will help students clarify key concepts about cash flow statements and to ready themselves for their exams and interviews. Problem 1 From the summarized cash book of Zenith Ltd. shown below, calculate net cash flow from operating activities. Zenith Ltd.  Summarized Cash Book Particulars $ Particulars $ To balance b/d 150,000 By repayment … Read more

Cash Flow Statement (CFS)

What Is a Cash Flow Statement? A Cash Flow Statement (CFS) is a financial statement primarily intended to provide information about the cash receipts and cash payments of a business during the period of time covered by the income statement. It is vital to keep track of cash flows on a continuing basis in order … Read more

Sources of Cash

In any given period, cash will be generated by any of the following activities: Net profit made in the period. Increase in share capital during the year. Increase in any liability during the year Decrease in any asset during the year Let us consider each of the above sources in some detail. Net Profit as … Read more

How to Prepare a Statement of Cash Flows

We will first prepare a cash flow statement of a sole trader’s business, as this will be easier than of a limited company. Example: John Bros. started a business on 1st January 2017 with cash $2,50,000. They purchased furniture for cash $35,000. They submitted the following information on 31st December 2017. Purchased merchandise for $85,000 … Read more

Reporting Cash Flows From Operating Activities

An enterprise can report cash flows from operating activities using any one method of the following: The Direct methods: Whereby major classes of gross cash receipts and gross cash payments are disclosed The indirect method: Whereby the profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals … Read more

Cash Flow From Financial Activities

Explanation Financing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the entity. The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of capital to the enterprise. The following … Read more

Cash Flow From Investing Activities

Explanation Investing activities are the acquisition and disposal of non-current assets and other investments not included in cash equivalents. The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. The … Read more

Cash Flow From Operating Activities

Cash flow from operating activities (CFO) means the sufficient amount of cash generated from the regular operations of an enterprise to maintain its operational capabilities. What Are the Operating Activities? Operating activities are the transactions that enter into the calculation of net income, such as cash receipts from the sale of goods and services, cash … Read more

Adjusted Net Profit

Adjusted Net Profit: Definition and Explanation After the adjustments shown above, we arrive at the Adjusted Net Profit, which appears as the first item on the sources side of the Cash Flow Statement. One can show these adjustments within the body of the Cash Flow Statement or prepare a separate statement to compute the Adjusted … Read more