![]() ![]() The purpose of the statement of cash flows is to give investors an indication of the firm's liquidity, that is, its ability to meet its financial obligations, particularly in the short-term. The sum of the cash flows associated with these three sources, plus any adjustments due to changes in exchange rates, gives the net change in cash in the period. plant, property, equipment).įinancing activities: Cash flows related to the financing operations of the company (i.e., bank loans, bond issuances, sale or repurchase of stock, etc.) Investing activities: Cash flows resulting from the purchase or sale of long-term assets (e.g. Operating activities: Cash flows related to the primary business function of the company. ![]() ![]() Each entry in the statement of cash flows is classified into one of three categories: Statement of cash flows, which, as its name implies, summarizes the sources and uses of cash during the period and computes the net change in the cash (and cash equivalents) of the firm. ![]()
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