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Cashflow Analsis: Deepa Pankaj Suman Tony

The document discusses the importance of the cash flow statement compared to the balance sheet and income statement. It provides 3 key reasons why organizations need a cash flow statement: 1) The balance sheet and income statement do not show the actual cash generated or used during a period. The cash flow statement reflects the major cash inflows and outflows from operating, investing, and financing activities. 2) The cash flow statement is helpful for assessing an organization's ability to generate future cash flows, meet obligations, pay dividends, and obtain external financing. 3) It explains the reasons for differences between net income and actual cash receipts and payments during a period.

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Deepa Chandirrasekar
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37 views11 pages

Cashflow Analsis: Deepa Pankaj Suman Tony

The document discusses the importance of the cash flow statement compared to the balance sheet and income statement. It provides 3 key reasons why organizations need a cash flow statement: 1) The balance sheet and income statement do not show the actual cash generated or used during a period. The cash flow statement reflects the major cash inflows and outflows from operating, investing, and financing activities. 2) The cash flow statement is helpful for assessing an organization's ability to generate future cash flows, meet obligations, pay dividends, and obtain external financing. 3) It explains the reasons for differences between net income and actual cash receipts and payments during a period.

Uploaded by

Deepa Chandirrasekar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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DEEPA
CASHFLOW ANALSIS PANKAJ
SUMAN
TONY
WHY CASHFLOW STATEMENT ?
* The balance sheet provides information about an
enterprise’s
* assets and
* how the assets have been financed by owned and
borrowed funds at a point of time,

*but it does not explain the changes


during a period in assets, liabilities
and equity resulting from the
enterprise’s activities

Why NOT Balance sheet !


* The profit and loss account provides
information about an enterprise’s financial
performance during a period, but because
earnings are measured by accrual accounting ,
it does not show the cash
generated through its operations.

Why NOT P/L


statement !
* the cash flow statement reflects an
major sources of cash
enterprise’s
receipts and cash payments.

what is cash flow statement ?


Investors, analysts, creditors, managers and others will find the
information in the cash flow statement helpful in assessing the following….
*The ability to generate positive future net cash flows.

*The ability to meet its obligations, its ability to pay dividends and its needs for
external financing.

*The reasons for differences between net profit and associated cash receipts and
payments.

*The effect on the enterprise’s financial position of both its cash and non cash
investing and financing transactions during the period.
The major activities of cashflow

* The cash flow statement will reflect the cash


flow effects of each of the major activities of
the enterprise when the cash flows are
classified according to whether they stem from
* Operating Activities
* Investment Activities
* Financial Activities
Infow outflow

Receipts
Receipts from
from Payments
Payments toto
customers
customers forfor OPERATING suppliers
suppliers and
and
OPERATING
sales
sales of
of goods
goods employees
employees for
for
and
and services
services Materials
Materials and
and
activities
activities ACTIVITIES Services
Services
ACTIVITIES

Operating Activities
Investing Activities
Financial activities

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