Explain the value of separating cash flows into operating activities, investing activities, and financing activities to...

Explain the value of separating cash flows into operating activities, investing activities, and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

Expert Solution

Answer: Format

Statement of Cash Flows
© www.excel-skills.com	Amount in $	Amount in $
Cash flows from operating activities
Net Income
*Adjustments for:*
Depreciation	XXX
Interest expense
Profit / (Loss) on the sale of property, plant & equipment
*Working capital changes:*
(Increase) / Decrease in trade and other receivables	XXX
(Increase) / (Decrease) in inventories	XXX
Increase / (Decrease) in trade payables	XXX
Salary and wages payable	XXX
Interest paid	XXX
Income taxes paid	XXX
Dividends paid	XXX
*Net cash from operating activities*		XXX

Cash flows from investing activities
Purchase of property, plant and equipment	XXX
Proceeds from sale of equipment	XXX
Acquisition of portfolio investments	XXX
Investment income	XXX
*Net cash used in investing activities*		XXX

Cash flows from Financing activities
Proceeds from issue of share capital	XXX
Dividend Paid	XXX
Payment of long-term borrowings	XXX
*Net cash used in financing activities*		XXX

Net increase in cash and cash equivalents		XXX

Add :Cash and cash equivalents at beginning of period		XXX

Cash and cash equivalents at end of period		XXX

As per the above format we know that cash Flow statement is divided in 3 Parts is called operating activities, investing activities, and financing activities.

Operating Activities: In This activity we can show the changes of all operating activities like changed in account receivable, Account payable, Stock, Depreciation Etc., So by operating activities we know is the our increase or decrease in cash flow in this activities.

Investing Activities: In this activity whether we invested money anywhere or sold any investment will come. So the net effect of increase or decrease will reflect in this section.

Financing activities: In this section we will show the changes done due to financial activities like issuance of bonds, Common shares and redemption of bonds etc.

So by these three activity we know the overall performance of cash flow in the company.

ekkarill92 answered 2 years ago

The statement of cash flows begins with the Financing activities section. Operating activities section. Investing activities...

The statement of cash flows begins with the Financing activities section. Operating activities section. Investing activities section. Last year's ending cash balance. In which section of the statement of cash flows each item would be reported? Paid cash for office supplies (Click to select)Operating ActivitiesInvesting ActivitiesFinancing Activities Paid cash for a computer (Click to select)Operating ActivitiesInvesting ActivitiesFinancing Activities Distributed cash dividend (Click to select)Operating ActivitiesInvesting ActivitiesFinancing Activities Received cash for services (Click to select)Operating ActivitiesInvesting ActivitiesFinancing Activities Purchased treasury stock...

Explain whether the expected net cash flows from the three activities (operating, investing, financing) would be...

Explain whether the expected net cash flows from the three activities (operating, investing, financing) would be in flows or outflows.

Discuss and provide examples of different types of cash flows as operating, investing, and financing activities.

Q1. Discuss the differences between operating, investing and financing activities, then describe the cash flows between...

Q1. Discuss the differences between operating, investing and financing activities, then describe the cash flows between a company and its stakeholders Q2. ALHAMD Watch Company manufactures two product lines—digital watches and analog watches. Income statement data for the most recent year follow: Total Digital Watches Analog Watches Sales revenue $850,000 $500,000 $350,000 Variable expenses (530,000) (250,000) (280,000) Contribution margin $320,000 $250,000 $70,000 Fixed expenses (180,000) (90,000) (90,000) Operating income (loss) $140,000 $160,000 $(20,000) Assuming fixed costs remain unchanged, and that...

Classify the following cash flows as either operating, investing, or financing activities assuming indirect method. Received...

Classify the following cash flows as either operating, investing, or financing activities assuming indirect method. Received cash interest on a note Paid cash interest on outstanding notes Received cash dividends from investments Paid accounts payable with cash Sold stock investments for cash Paid cash for a building Cash paid to purchase long-term investments Received cash from long-term debt issuance Received cash from short-term debt issuance Received cash payments from customers

Of which are these are operating, investing, financing, and non-cash activities? Purchase of furniture for cash,...

Of which are these are operating, investing, financing, and non-cash activities? Purchase of furniture for cash, deprecation expense, new long-term loan for operations, proceeds from sale of land, change in accounts payable, gain on sale of building, issuance of long-term notes payable, and conversion of bonds payable to common stock.

Prepare the cash flows from investing and financing activities sections of HHC's statement of cash flows.

The following are summary cash transactions that occurred during the year for Hilliard Healthcare Co. (HHC): Cash Received from: Customers ........................................................$660,000 Interest on note receivables ..........................12,000 Collection of note receivable.......................100,000 Sale of land ..........................................................40,000 Insurance of common stock..........................200,000 Cash paid for: Interest on note payable .................................18,000 Purchase of equipment .................................120,000 Operating expenses .......................................440,000 Dividends to shareholders .............................30,000 Prepare the cash flows from investing and financing activities sections of HHC's statement of cash flows.

The three sections of the cash flow statement include operating activities, financing activities, and investing activities....

The three sections of the cash flow statement include operating activities, financing activities, and investing activities. The investing activities show funds that are flowing into the business which are generated by the primary business activity of the company. This is why investing activities are considered to be a report of the “lifeblood of the company”. Select one: True False

Classify cash inflows and outflows as relating to operating, investing, or financing activities.

Briefly discuss Sims Metal Management Limited’s net cash flows from operating, investing, and financing activities and...

Briefly discuss Sims Metal Management Limited’s net cash flows from operating, investing, and financing activities and the trends evident over the last three years: 2019, 2018, 2017. Refer to their annual report.

Question