FIN 305 Lecture Notes - Lecture 7: Operating Cash Flow, Cash Flow
31 Oct 2016
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Document Summary
Key stakeholders ultimately expect cash flow to them from the biz. Like i/s, first three blocks have a subtotal. All subtotals are separate, so they don"t build off of one another. Cffo is most important--if that"s negative, you"re in deep shit. Cffi aggregates to a net outflow, so it"s usually negative because expenditures. Cfff comes from raising or paying back capital. Ending balance = ncf + beginning balance. Determine info to aid/evaluate/predict operating cash flow. Cfs is on cash basis, but operating info comes from acrrual based statements (is and. 3 steps: net income: but cash received or disbursed if there"s credit, remove permanent differences that impact ni but not cash. Depreciation/amortization expense = noncash expense, so you add it back to cash flow: adjust for timing differences. Subtract credit sales that haven"t been collected yet, add back expenses that haven"t been paid yet. Cffo is basically net income +/- adjustments.
