Cash Flow Statement

FINANCE 104
FINANCIAL REPORTING AND
ANALYSIS

OPERATING ACTIVITIES
 Cash receipts from customers
 Cash receipts from royalties, rentals, fees,
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commissions, and other revenues
Cash payments to suppliers
Cash payments for selling, administrative
and other expenses
Cash receipts and cash payments for
premiums, claims, annuities and other
policy benefits
Cash payments or refunds of income taxes
Cash receipts and payments for trading
securities

INVESTING ACTIVITIES
 Cash payment to acquire PPE, intangibles and other
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long0-term assets
Cash receipts from sale of PPE, intangibles and
other long-term assets
Cash payment to acquire equity or debt
instruments of other entities including joint venture
Cash receipts from sale of equity and debt
instruments of other entities including joint venture
Cash receipts from repayment of advances and
loans to other parties
Cash payment for future, forward, option, swap
contracts
Cash receipts from future, forward, option, swap
contracts

FINANCING ACTIVITIES
 Cash receipts from issuing shares
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(ordinary, preference shares)
Cash payments to acquire or redeem
shares (treasury shares)
Cash receipts from issuing debentures,
loans, notes, bonds, long-term
borrowings
Cash payments for amounts borrowed
Cash payments by a lessee for the
reduction of outstanding liability relating
to a finance lease

Calculation of cash
payment for operating
expenses
Operating expenses
+ increase in prepaid expenses
or
- decrease in prepaid expenses
+ decrease in accrued expenses
or
- increase in accrued expenses
- other non-cash expenses (depreciation,
amortization, bad
debts)
-------------------------------------------------------------------------Cash payments for operating expenses

Payment for income tax
Income tax expense
+ decrease in income tax payable
or
- increase in income tax payable
---------------------------------------------------Cash payment for income tax

Payment for interest
expense
Interest expense
+ decrease in interest payable
or
- increase in interest payable
---------------------------------------------------Cash payment for interest

INDIRECT METHOD
Net income
- increases in trade non-cash current assets
+ decreases in trade non-cash current assets
+ Increases in trade current liabilities
- decreases in trade current liabilities
+ non-cash expenses (depreciation,
amortization, bad
debts)
- gain on disposal of PPE (because these are
non-operating)
+ loss on disposal of PPE
----------------------------------------------------Net cash from operating activities

NON-CASH TRANSACTIONS
(AS NOTES TO FS)
 Acquisition of assets either by assuming

directly related liability or by means of
finance lease
 Acquisition of assets by means of issuing
share capital or bonds payable
 Conversion of debt to equity (conversion of
bonds payable to share capital)
 Conversion of preference shares to ordinary
shares
Because these are material information that
affects the financial structure of the entity
(A, L, E)