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Discuss: The importance of Cash Economic and Financial Crisis

Cash Flow Statement and its purpose

Understand the differences: FASB and IFRS

Prepare comprehensive Cash Flow Statement (Comprehensive Illustration)

Prepare the presentation & disclosures.

the survival, growth and profitability of the business

STRATEGIC DECISIONAssess the financial health of a business

Investors Shareholders Creditors Employees Managers/owners: warning signs

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Define Cash (Cash and Cash Equivalent) Highly liquid, Short-Term investments

(money market funds), Treasury bills, commercial paper

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PRIMARY ELEMENTS OF THE CASH FLOWS Reports: cash inflows and outflows

INVESTING ACTIVITIES long-term assets

investment

FINANCING ACTIVITIES

OPERATING ACTIVITIES core of the business

=

NET INCREASE (DECREASE) IN CASH

long-term debt and equity

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FASB 95 Interest payments (operating ) Interest/dividends received (operating) Dividends paid (financing )

IAS 7 IAS 7 Classification of Cash Flow same

except: Research…… DIFFERENCES: Classification

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FASB Identifies two methods:The indirect method derives cash flows

from accrual basis statements. (also called reconciliation method)

The direct method determines cash flows directly for each source or use of cash.

Difference…. OPERATING ACTIVITIES ONLY

Preparing Comprehensive Cash Flow StatementIllustration… Additional consideration:

Bonds payable Discount/premium on bonds payable Convertible bonds Retirement of bonds

Stock: Preferred/common Convertible preferred Treasury Stock

Dividends Cash/stock dividends Deferred Tax Lease Pension Investment: using equity method

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