Business Administration 1220E Lecture Notes - Lecture 6: Retained Earnings, Cash Flow, Dr. Dre

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Trina Ruthes

Document Summary

Statement of cash flow- identifies specific activities that provide or consume cash during a specific period of time. Operations- measures the cash flow associated with normal business activities. Financing- how much debt or equity has been acquired or retired over the year. Investing- outlines all cash movements relating to the acquisitions and disposals of non-current assets. Net cash flow- sum of the three components: operating, financing and investing activities. Financial ratio analysis- a useful financial management tool developed to assist in identifying, interpreting and evaluating changes in the financial performance and condition of a business over a period of time. Not all the items on the statement of earnings are cash-based. Preparing a statement of cash flow aids in revealing a company"s real financial standing. Should use short-term source to pay for short-term purchases and a long-term source should be used to pay for a long-term purchase.