chap007CashFlowAnalysis(财务报表分析,台湾中兴大学)

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,7,CHAPTER,Cash Flow Analysis,McGraw-Hill/Irwin,2004 The McGraw-Hill Companies,Inc.,All Rights Reserved.,1,Statement of Cash Flows,Relevance of Cash Flows,Cash Defined,-refers to cash and cash equivalents.,Cash equivalents,are short-term,highly liquid investments that are(1)readily convertible to known amounts of cash,and(2)near maturity(typically within 3 months)with limited risk of price changes due to interest rate shifts.,2,Statement of Cash Flows,Relevance of Cash Flows,Cash is the beginning and the end of a companys operating cycle.,Net cash flow is the end measure of,profitability.,Cash repays loans,replaces equipment,expands facilities,and pays dividends.,Analyzing cash inflows and outflows helps assess liquidity,solvency,and financial flexibility,.,Liquidity,is the nearness to cash of assets and liabilities.,Solvency,is the ability to pay liabilities when they mature.,Financial flexibility,is the ability to react to opportunities and adversities.,3,Statement of Cash Flows,Relevance of Cash Flows,Statement of cash flows(SCF),helps address questions such as:,How much cash is generated from or used in operations?,What expenditures are made with cash from operations?,How are dividends paid when confronting an operating loss?,What is the source of cash for debt payments?,What is the source of cash for redeeming preferred stock?,How is the increase in investments,financed,?,What is the source of cash for new plant assets?,Why is cash lower when income increased?,What is the use of cash from new financing?,4,Statement of Cash Flows,Cash Flow Relations,Illustration:Consider two consecutive years balance sheets divided into(1)cash,and(2)all other balance sheet accounts:,Accounts Year 1 Year 2,Cash and cash equivalents,$3,000,$5,000,Noncash accounts:,Noncash current assets$(9,000)$(11,000),Noncurrent assets (6,000)(8,000),Current liabilities 8,000 10,000,Long-term liabilities 3,000 5,000,Equity accounts,7,000,9,000,Net noncash balance$3,000$5,000,Note:,Change in cash from Year 1 to Year 2(increase of$2,000)=Change in noncash balance sheet accounts($2,000 increase)from Year 1 to Year 2,5,Interrelations between cash and noncash balance sheet accounts can be generalized:,Net changes in cash are explained by net changes in noncash balance sheet accounts.,Changes within or among noncash balance sheet accounts do not affect cash.Yet,there is disclosure of all significant financing and investing activities in a separate schedule of noncash investing and financing activities.,Changes within the components of cash are not reported,.,Statement of Cash Flows,Cash Flow Relations,6,Statement of Cash Flows,Reporting by Activities,Statement of cash flows reports receipts and payments by operating,financing,and investing activities,Operating activities,are the earningrelated activities of a company.,Investing activities,are means of acquiring and disposing of noncash assets.,Financing activities,are means of contributing,withdrawing,and servicing funds to support business activities.,7,Statement of Cash Flows,Net Cash Flows from Operations,Indirect Method,-Net income is adjusted for non-cash income(expense)items and accruals to yield cash flow from operations,Direct Method,-Each income item is adjusted for its related accruals,*Both methods yield identical results-only the presentation format,differs.,8,Statement of Cash Flows,Indirect Method,Net Cash Flows from Operations,Net Income,+Depreciation,+/-Gains(losses)on sales of assets,+/-,Cash generated(used)by current assets&liabilities,Net cash flows from operating activities,9,Statement of Cash Flows,Depreciation Add-Back,Sales,-Expenses,-Depreciation and amortization expense,Net Income,+Depreciation expense,+/-Gains(losses)on sales of assets,+/-Cash generated(used)by current assets,and liabilities,Net cash flows from operating activities,Add Back,10,Statement of Cash Flows,Income vs.Cash Flows Example,Consider a$100 sale on account,In period of sale,net income is increased by$100 but no cash has been generated.,Net Income100,Depreciation and amortization expense 0,Gains(losses)on sale of assets 0,Change in accounts receivable (100),Net Cash flow from operations 0,In period of collection no income is recorded.,Net Income 0,Depreciation and amortization expense 0,Gains(losses)on sale of assets 0,Change in accounts receivable 100,Net Cash flow from operations100,11,Statement of Cash Flows,Constructing the Statement,Increase Decrease,Assets(Outflow)Inflow,LiabilitiesInflow (Outflow),12,Statement of Cash Flows,Constructing the Statement,The company purchased a truck during the year at a cost of$30,000 that was financed in full by the manufacturer.,A truck with a cost of$10,000 and a net book value of$2,000 was sold during the year for$7,000.There were no other sales of depreciable assets.,3.Dividends paid during Year 2 are$51,000,13,Statement of Cash Flows,Steps 。