Statement of Cash Flows - Business Finance - ثاني ثانوي

. Link to digitat leston 3.4 Statement of Cash Flows www.en.edu.sa Statement of cash flowy A financial statement summarizing the amount of money that is coming into and going out of a firm Key Term Statement of cash flows Accountants, financial managers, and investors put an emphasis on analyzing a firm's ability to generate cash, which has led to the creation of the "statement of cash flows." This statement determines the changes in the firm's holdings of cash and cash equivalents, and serves as a link between the income statement and the balance sheet. The statement of cash flows is divided into three sections: 1. operating activities. 2. investment activities. 3. financing activities. 100 Business Finance In each section, it enumerates the inflow and outflow of cash. The cash inflows are: 4. a decrease in an asset. 5. an increase in a liability. 6. an increase in equity. The cash outflows are: 7. an increase in an asset. 8. a decrease in a liability. 9. a decrease in equity. The bottom line of the statement of cash flows is the firm's cash position at the end of the accounting period. If the firm uses more cash than it generated, its cash holdings (or cash equivalents) will decline. Conversely, if the firm's cash inflows exceed the outflows, its cash and cash equivalents will rise. By placing the emphasis on cash, the statement permits the analyst to see where the firm generated cash and how this money was used. Figure 3.8 illustrates a statement of cash flow for Khalid's sustainable technology company.

Statenint of Cash Fluvis Net profit Add depreciation FIGURE 3.8 890,000 30,000 -40,000 Khalid's Sunable Tedivnulogy Company's statement of Cash Flows for 20X1 -Increase in accounts receivable + Decrease in inventory + Decrease in prepaid.expenses -Increase in other current assets -Decrease in short-term debt -Decrease in accounts payable + Increase in accrued salary and wages -Decrease in other accrued liabilities + Increase in accrued income taxes payable (A) Cash Flows From Operating Activities -Increase in plant (purchases) -Increase in buildings (purchases) + Decrease in equipment (sales) 80,000 9,000 -11.000 -120,000 -70,000 34,000 -4,500 13,000 SAR 810,500 -225,000 -113,000 80,000 -Increase in other long term assets -112,000 (B) Cash Flows From Investing Activities SAR-370,000 + Increase in Long-term debt -Decrease in deferred taxes -Decrease in other long-term liabilities Subtract dividends (C) Cash Flows From Financing Activities Net Cash Flow (A+B+C) Beginning Cash (20X0) Ending Cash (20x1) وزارة التعليم 145,000 -60,000 -118,000 -356,000 SAR-389,000 SAR 51,500 SAR 234,000 SAR 285,500 CHAPTER 3 Analysis of Financial Statements 101