M4L1V1: Cash Flows Statement: Overview

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來自 University of Illinois at Urbana-Champaign 的課程

Financial Accounting: Advanced Topics

469 個評分

University of Illinois at Urbana-Champaign

Financial Accounting: Advanced Topics

469 個評分

課程 2（共 7 門，Specialization Financial Management）

In this course, you will explore advanced topics in financial accounting. You will start your journey with accounting for assets with more than one-year life. You will learn in detail how firms account for fixed assets. You will then move to financing of assets and discuss accounting for liabilities. The course will continue with an in-depth exploration of shareholders’ equity. Finally, you will critically evaluate preparation, components, and analysis of cash flows statement. Upon successful completion of this course, you will be able to: • Account for fixed assets • Understand accounting for liabilities • Evaluate shareholders’ equity section of a balance sheet • Understand preparation and information provided by cash flows statement This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

從本節課中

Module 4: Cash Flows Statement

One of the major financial statements is cash flows statement. This statement describes in detail how cash changes for a firm over a certain period. Cash flows statement provides valuable information about liquidity position of a firm, cash consequences of managerial operating and investing decisions, as well as earnings quality of a firm.

M4L1V1: Cash Flows Statement: Overview4:59

與講師見面

Oktay Urcan
Associate Professor of Accountancy
Department of Accountancy, College of Business

[SOUND] Hello, welcome to

Financial Accounting: Advanced Topics

here at University of Illinois.

Today we are going to talk about cash flow statement.

Here's a bit of an overview of what we're going to do today.

First we are going to compare net income to cash flows.

And then we will briefly discuss what kind of information we can learn form

cash flow statement.

And finally we are going to spend a lot of time on preparation of cash flow

statements.

So what is net income?

Well that number that you see at the end of the income statement is net income.

In other words, net income summarizes firm's revenues, expenses,

gains and losses.

Net income is a useful proxy for profitability.

However, net income doesn't tell you anything about

company's liquidity position.

For example, company can be very, very profitable but

it doesn't necessarily mean that company's also generating a lot of cash.

If you want to learn company's liquidity position, you have to look at cash flows.

And we have cash flow statement to analyze company's

cash inflows and cash outflows in a systematic manner.

So what kind of information we can learn from cash flow statement?

First of all, by looking at cash flow statement,

you can learn where cash generated and how this cash is spent within a firm.

Second, by looking at cash flow statement,

you can evaluate the company's operating, financing, and investing policies.

Third of all, by looking at cash flow statement, you can compare net income to

cash flows generated from operations so that you have an idea about company's

earnings quality and I'm going to have a discussion about this soon.

And finally cash flow statements help you

to predict future cash flows much more precisely.

Cash flow statements have three parts.

The first and the most important part is cash flows from operations.

Here we will see from the company's core operations how much cash is generated.

The second component is cash flows from investing activities.

Here we will see how much cash is spent or generated,

company's investment activities and

most of the time when I say investment, you should think about fixed assets.

And finally, the third component is cash flow from financing activities.

Here we will have an idea about company's cash generation or

cash spending on financing activities.

By financing I'm talking about equity issuance, dividends, and bank loans.

Here is an example of a cash flow statement from Walmart at the end of year

2015.

And let's first concentrate on the last box.

The first number on the last box is net increase in cash and

cash equivalents of 1,854.

This is the amount of cash generation, net cash generation, in year 2015.

The second number is cash and

cash equivalents at the beginning of the year and that amount is 7,281.

So we know beginning amount of cash, we know the amount of cash change within

the year 2015 and if we sum them up we are going to find the last number on this box,

which is cash and cash equivalents at the end of the year of 9,135.

In other words, cash flow statement explains to you in detail how

cash of Walmart changed between year 2014 and 2015.

And this amount of cash change is 1,854.

So the question here is, where is this cash exchange coming from?

The first and

the most important section of cash flow statement is, cash flow from operations.

And that is the first box in the slide.

How much is the cash flow from operations for Walmart?

It is 28,564.

That's a huge positive number.

So Walmart generates this much of cash from its core operations,

which is buying and selling groceries.

Secondly, we have cash flows used in investing activities of

negative because the number is in parentheses, 11,125.

This is the total amount of cash used in investing activities.

And thirdly, we have cash used in financing activities of again

minus because it is again in parentheses, 15,071.

So basically cash flow from operations,

cash flow from investing activities and cash flow from financing activities

will give you net cash change in the year 2015 of 1,854.

Now, we are going to spend some more time on preparation of cash flow statements.

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