Reading a cash flow statement
A cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills.
Neither depreciation nor amortization will directly affect the cash flow of a company, as both are accounting representations of expenses attributable to a given period. In accounting statements, depreciation may neither figure in the cash flow statement, nor be added back to net income to derive the operating cash flow.
At first it was very difficult for me to create and understand the cash flow statement, but after taking several accounting classes I have improved so much.
I really like the way you further explain your concepts in a couple paragraphs under the toondoo. Also, the toondoo was very funny to watch because their reactions were so animated.
ReplyDeleteI loved the toondoo and your first paragraph alone would have been more than adquate! The second paragraph, however, added more information that related to your toondoo and the third paragraph explained how to learn more about the subject. Amazing job! :)
ReplyDeleteI love the subject of your toondoo. Cash flow statements are great for measuring success of a company. The toondoo was nice and entertaining to read.
ReplyDeleteAwesome cash flow explanation. You did a good job summing up the key points and explaining what that particular statement does. Funny comic to add to post, also. :)
ReplyDeleteI really liked your toondoo. I also liked how you fully explained what the cash flow statements shows about the company. You really did a great post.
ReplyDeleteOne of my assignments is on how to read an income statement. It will most likely be similar to this, thanks for the ideas.
ReplyDeletePerfect post, Rosa!!!!
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