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Cashflow Statement

The document discusses cash flow statements, which show the inflows and outflows of cash from operating, investing, and financing activities over a period of time. Operating activities refer to core business operations that generate revenue. Investing activities involve the purchase and sale of long-term assets and securities. Financing activities relate to raising and repaying debt or equity. While cash flow statements are useful, they only reflect cash amounts and not accrual-based transactions, so net income may differ from cash flow.

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Vivek Ranjan
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281 views14 pages

Cashflow Statement

The document discusses cash flow statements, which show the inflows and outflows of cash from operating, investing, and financing activities over a period of time. Operating activities refer to core business operations that generate revenue. Investing activities involve the purchase and sale of long-term assets and securities. Financing activities relate to raising and repaying debt or equity. While cash flow statements are useful, they only reflect cash amounts and not accrual-based transactions, so net income may differ from cash flow.

Uploaded by

Vivek Ranjan
Copyright
© Attribution Non-Commercial (BY-NC)
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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CASHFLOW STATEMENT

By to edit Master subtitle style Click Bimal Kumar Chand Chandni Bharti Dhruv Danish

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MEANING

CASH
i. ii. iii.

Cash in hand Demand Deposits in Banks Cash Equivalents

Cash equivalents are short-term, highly liquid investments, readily convertible into cash and which are subject to insignificant risk of changes in values. 5/5/12

Flow:flow means flow of cash from business to economy and economy to business. Statement:statement is a performa prescribed by Charted Accountant Act,1948.

Thus,
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cash flow statement is a

Categories of Inflows And Outflows

The statement of cash flow shows three main categories of cash inflows and cash outflows, namely : operating, investing and financing activities. Operating activities are the principal revenue generating activitiesof the enterprise. Investing activities include the 5/5/12 acquisition and disposal of

Operating Activities

Cash Outflows:
Cash from sales Cash received from

Debtors

Cash received from commision and fees royalty and other revenues

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Investing Activities

Cash inflow:
Sale of fixed assets Sale of investments Interests received Dividend received

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Financing Activities

Cash inflow:
Issue of shares Issue of debuntures in cash Proceeds of long term short term borrowings

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Cash flow Fund flow

Meaning of fund:means only cash

component ofcurrent assets.

Objective:is to know about the changes occurred in cash position between two balance sheet dates. Basis of preparation:increase in current liability or decrease in current asset results in increase in cash or vice versa. Utility:useful for short term analysis Effect of transaction:effect of a transaction only on cash is considered Cash balances:opening and closing balances are shown in cash flow statement

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Limitations of cash flow statement


Though it is true that cash flow statement is very useful now-a-days and serves many purposes. But it is necessary to take certain precautions while making use of this important tool.

It is very difficult to precisely define the term cash


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There are controversies over a

As the present business moves from the cash basis to accrual basis, the prepaid and credit transactions might be represented an increase in working capital and it would be misleading to equate net income to cashflow because a number of non cash items would affect the net income.
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Balance sheet
liabilities Paid up capital Retained earnings 2005 (Rs. 000) 50 2006 (Rs. 000) 50 assets 2005 (Rs.000) 2006 (Rs.000) 1125 Gross fixed 1000 assets Accrued (100) depriciation inventory 100

350

415

(175)

Long term 500 debts Notes payable Accounts payable total 5/5/12 80

550 100

110 60

Accounts 50 recevables cash total 10 1060

80 1060

90 1205

85 1025

Income Statement (Rs.000)

Sales 1200 Cost of goods sold (800) Gross profit 400 Selling,general and administartion (150)
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EBIT

Additional information (Rs.000) Dividend paid 35 Additions to be retained 65 Depreciation 75


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THANK YOU!

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