COMM-1107EL Chapter Notes - Chapter 12: Cash Flow, Income Statement, Accrual
21 Mar 2017
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Chapter (cid:1005)(cid:1006) the state(cid:373)e(cid:374)t of cash flows. The uses of the statement of cash flows. This statement reports how managers got the cash and how they used it: determine ability to pay dividends and interest shareholders want dividends on their investments. Creditors collect interest and principal on their loans. This statement reports on the ability to make these payments: assess the relationship of net income to cash flows usually, cash and net income move together. A company needs both net income and a strong cash flow : without net income, there will be no dividends, the share price will suffer, and investors will not be attracted; and, companies cannot pay bills without cash. Income and cash flow usually move together because net income generates cash. Sometimes, however, net income and cash flow follow different patterns! Explain and classify cash flows from operating, investing, and financing activities. A business engages in 3-types of business activities: operating activities.
