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Cash Flow Statement Project

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41 views14 pages

Cash Flow Statement Project

Uploaded by

amukhith4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CASH FLOW

BY:-
ABISHAI
MUKHITH
RAKESH
MADHAN
AFNAN
Cash Flow Statement
In this presentation, we will explore
the purpose and importance of a cash
flow statement, its components, and
how to analyze and interpret it.
Introduction
A cash flow statement provides valuable insights
into the financial health of a company.
Understanding cash flow is crucial for making
informed investment decisions.
The cash flow statement is designed to help
stakeholders, including investors, creditors, and
management, understand how a company
generates and utilizes cash. It is divided into
three main sections: operating activities,
investing activities, and financing activities.
These sections help break down the sources and
uses of cash, making it easier to assess a
company's ability to meet its short-term and
long-term financial obligations.
According to IAS Standards

 The objectives of IAS 7 are to ensure that business entities:

 Report their cash generation and cash absorption for a period by


highlighting the significant components of cash flow in a way that
facilitates comparison of the cash flow performance of different
businesses.

 Provide information that assists in the assessment of their liquidity,


solvency and financial adaptability.
Components of a Cash Flow
Statement
• Shows the cash generated from
Operating Activities:
day-to-day operations, such as sales and expenses.
• Investing Activities: Reflectsthe cash flows from
investments in assets, such as property, plant, and
equipment e.g, Interest Received, Dividends
received.
• Financing Activities: Covers the cash flows from
raising or repaying capital, such as issuing stocks or
borrowing.
• At the bottom of the cash flow statement, you'll
find the total change in cash and cash equivalents
for the reporting period. This shows whether the
company generated more cash than it spent or vice
versa.
Direct Method:
 The direct method reports actual
cash receipts and payments e.g,
Sales, Purchases & Wages
INDIRECT METHOD:
 The indirect method starts with net income
and adjusts for non-cash items and changes
in working capital
DIRECT

METHOD
FORMAT
Analyzing a Cash Flow Statement
 Positive Cash Flow:
Positive cash flow indicates that a
company is generating more cash than it spends.
Negative CASH Flow:
Negative cash flow may signal financial challenges.

 Cash Flow Ratio:


Calculating the ratio of cash flow to current
liabilities helps assess a company's ability to meet its short-term
obligations.
Interpretation and Use of the
Cash Flow Statement

 Evaluating a company's financial health:

Analyzing the cash flow


statement alongside other financial
statements allows for a comprehensive
assessment of a company's financial
position.
 Making informed investment decisions:

Understanding a company's
cash flow helps investors evaluate its ability to
generate future earnings and repay debt.
Conclusion
THANK YOU

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