COMM-2026EL Chapter Notes - Chapter 3: Profit Margin, Valuation Using Multiples, Sears Canada
17 Sep 2017
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Cash flow and financial statements: a closer look. At the most fundamental level, firms do two different things: generate cash and spend cash. Cash is generated by selling a product, an asset, or a security (selling a security involves either borrowing or selling an equity interest in the firm) Cash is spent by paying for materials and labour to product a product, and by purchasing assets. Sources of cash a firm"s activities that generate cash. Uses of cash a firm"s activities in which cash is spent. Changes in the firm"s statement of financial position must be traced to see how the firm obtained and spent its cash during some time-period. *note that the net change in cash should equal the amount that. Cash has changed from this period to last on the statement of financial position. Change in retained earnings = (current ni previous ni) current years" dividends.
