FIN 305 Lecture Notes - Lecture 7: Disclose
31 Oct 2016
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Most businesses need costly resources = huge dent in cash. Especially important for growing businesses to predict cash. Cffi aka cash provided (consumed) by investing activities. Cash is the most critical resource for any business, budgets are important!! Accurate budgets = able to forecast, leverage potential surpluses. Cffi usually outflow, because they"re expenditures on resources and assets. Disclose the extent to which biz spends cash on/recovers cash from ltas. No reconciling needed- just remember that only cash amounts are recorded. Purchase line = amount spent getting new stuff, replacements, and small additions. This is probs not as consistent as operating/financing. Common to show total amount spent for equipment, not just amount net of financing obtained for assets. Example: if you got a bank loan to finance equipment, could be: But: financing decision and strategy are independent, so separate them (could vary from purchase to purchase) Therefore bank loan will be reported under financing activities.
