Statement of Cash Flows

The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that report the cash generated and spent during a specific period of time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business.

Three Sections of the Statement of Cash Flows:

1. Operating Activities: The principal revenue-generating activities of an organization and other activities that are not investing or financing; any cash flows from current assets and current liabilities
2. Investing Activities: Any cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents
3. Financing Activities: Any cash flows that result in changes in the size and composition of the contributed equity capital or borrowings of the entity (i.e., bonds, stock, dividends)

Cash Flow Definitions

Cash Flow: Inflows and outflows of cash and cash equivalents (learn more in CFI’s Ultimate Cash Flow Guide)

Cash Balance: Cash on hand and demand deposits (cash balance on the balance sheet)

Cash Equivalents: Cash equivalents include cash held as bank deposits, short-term investments, and any very easily cash-convertible assets – includes overdrafts and cash equivalents with short-term maturities (less than three months).

Cash Flow Classifications

1. Operating Cash Flow

Operating activities are the principal revenue-producing activities of the entity. Cash Flow from Operations typically includes the cash flows associated with sales, purchases, and other expenses.

The company’s chief financial officer (CFO) chooses between the direct and indirect presentation of operating cash flow:

• Direct Presentation: Operating cash flows are presented as a list of cash flows; cash in from sales, cash out for capital expenditures, etc. This is a simple but rarely used method, as the indirect presentation is more common.
• Indirect Presentation: Operating cash flows are presented as a reconciliation from profit to cash flow

The items in the cash flow statement are not all actual cash flows, but “reasons why cash flow is different from profit.”

Depreciation expense reduces profit but does not impact cash flow (it is a non-cash expense). Hence, it is added back. Similarly, if the starting point profit is above interest and tax in the income statement, then interest and tax cash flows will need to be deducted if they are to be treated as operating cash flows.

There is no specific guidance on which profit amount should be used in the reconciliation. Different companies use operating profit, profit before tax, profit after tax, or net income. Clearly, the exact starting point for the reconciliation will determine the exact adjustments made to get down to an operating cash flow number.

2. Investing Cash Flow

Cash Flow from Investing Activities includes the acquisition and disposal of non-current assets and other investments not included in cash equivalents. Investing cash flows typically include the cash flows associated with buying or selling property, plant, and equipment (PP&E), other non-current assets, and other financial assets.

Cash spent on purchasing PP&E is called capital expenditures (or CapEx for short).

3. Financing Cash Flow

Cash Flow from Financing Activities are activities that result in changes in the size and composition of the equity capital or borrowings of the entity. Financing cash flows typically include cash flows associated with borrowing and repaying bank loans, and issuing and buying back shares. The payment of a dividend is also treated as a financing cash flow.

Based on the upper information,

Question: What is the difference between the direct and indirect method of cash flow preparation? Which method provides better information and why?

B. The proportion of customers who are completely satisfied in a recent satisfaction survey of 300 customers at XYC Inc. is found to be 0.26. Test the hypothesis that the population proportion of customers who are completely satisfied is greater than 0.22 using the critical value approach and a 0.05 level of significance. e Test the hypothesis that the population proportion of customers who are completely satisfied is less than 0.30 using the p-value approach and a 0.05 level of significance. b. Test the hypothesis that the population proportion of customers who are completely satisfied is different from 0.24 using the p-value approach and a 0.05 level of significance. C.

A women is brought to the ER where you are working triage. She has an extremely swollen right lower leg. You see what appears to be an old surgical wound in the mid-calf, with rough scar tissue surrounded by purplish-red skin. She is in a lot of pain and her husband speaks for her. He tells you that three weeks ago she had a group of moles removed from that area. It had appeared to heal initially, but three days ago the incision area started looking bigger rather than smaller. She did not return to the physician, hoping the condition would resolve itself. In the past three days the area has begun to swell and become very hot. You call the attending physician immediately because you know that this is a serious condition.

The patient is sent straight to surgery where the wound is debrided. Gram-positive cocci growing in chains are recovered from the wound. She is transferred to intensive care and put on high-dose intravenous antibiotics for the next 18 hours, but the next evening her leg is amputated below the knee. She remains in the hospital for two months following surgery and requires long-term antibiotic therapy and multiple skin grafts on her upper leg.

1. What condition did this patient have? What organism caused it? Provide your rationale. (5 pts)
2. Why was amputation the best solution for the infection in this case? (3 pts)
3. How is the organism transmitted? How might the patient have contracted it? (2 pts)
4. If the organism gets into blood, what other condition would doctors become concerned about? What virulence factors contribute to this condition – explain their mechanism of action and how it contributes to the disease condition. (4 pts)

Saeko owns a yarn shop and want to expands her color selection. Before she expands her colors, she wants to find out if her customers prefer one brand over the other brand. Specifically, she is interested in three different types of bison yarn. As an experiment, she randomly selected 15 different days and recorded the sales of each brand. At a .05 significance level can she conclude that there are differences in preference between the brands?

1. What is the null hypothesis?

2. What is the alternate hypothesis?

3. What is the level of significance?

Use Tools-Data Analysis-Anova Single Factor Anova: Single Factor to find the F statistic;

4. from the ANOVA output; What is the F value?

5. What is the F critical value?

6. What is your decision?

Use the "Pivot Table Data" tab to crate a pivot table that shows Seako the number of yards and meters that were sold in the various yarn types during the busiest weekend of her shop last year.

PLEASE SHOW HOW TO DO ALL EXCEL FUNCTIONS. THANK YOU!

12: A random sample of 50 drive-thru customers at Burger World (a subsidy of Malco, Inc.) was taken to determine the average transaction time after the order was placed during the evening rush (4:00 PM to 6:00 PM).   The edited Data Analysis output is shown below. Answer the following five questions. (3.5 pts.)

1. Identify the degrees of freedom and the critical value of t used in the calculation of the 95% confidence interval.

2. Calculate the lower confidence limit (LCL) and the upper confidence limit (UCL). (Round the LCL and UCL to two decimal places, (i.e., 12.13, 45.67.)

3. Interpret the confidence interval: I am _____ confident that the _________ of transaction time is between the lower confidence limit (LCL) and the upper confidence limit (UCL).

4. If the confidence level is changed to 99 percent, does the width of the confidence interval increase or decrease?

5. Would it be reasonable or plausible to conclude that the population mean is four minutes? Explain your reasoning.

6. What is the standard error of the mean? Show the SE to three decimal places, (i.e., .123).

7. What sample size is needed to reduce the standard error by half?

A researcher randomly assigns 33 subjects to one of three groups. Group 1 receives technical dietary information interactively from an on-line website. Group 2 receives the same information from a nurse practitioner, while Group 3 receives the information from a video made by the same nurse practitioner.

The researcher looked at three different ratings of the presentation: difficulty, usefulness, and importance to determine if there is a difference in the modes of presentation. In particular, the researcher is interested in whether the interactive website is superior because that is the most cost-effective way of delivering the information.

1. Run the appropriate analysis of the data and interpret the results.
2. How could this study have been done differently? Why would this approach be better or why would it not be?

Exercise 2

The following data represent the mutual fund prices reported at the end of the week for selected 42 nationally sold funds.

10        17        15        18        22        19        10        17        18        25        11        13        35        28

27        29        39        31        35        33        22        24        28        35        45        50        47        38

41        31        21        11        49        38        35        25        33        42        27        15        28        34

1. Organize the data.
2. Present the data.

Exercise 3

Twenty MBA students have got the following marks out of 100 in three courses in the first semester.

1. Organize the above data in meaningful form.
2. Present the data.
3. Analyze and compare performance of students in three courses.

Exercise 4

A random sample of 8 MBA students from two sections of same batch are selected from of a B-School. The marks scored by these students are given below;

On the basis of sample statistic find out (show working),

1. Which section is more consistent?                                                           
2. Which section’s overall performance is better and why?

Exercise 2-2
The following A. B. Murphy Company data show purchase and sales transactions for the month of April. A. B. Murphy uses a perpetual inventory system.

Compute the following:
1.   Cost of (1) goods available for sale and (2) number of units for sale.

2.   Number of units in ending inventory.

1.   Cost assigned to ending inventory, using any three of the following four methods. Compute costs using all four methods for distinguished performance. Round per unit costs to three decimal places and inventory balances to the nearest dollar.
a.   FIFO.
b.   LIFO.
c.   Weighted average.
d.   Specific identification (see note below).

FIFO Perpetual

LIFO Perpetual

Weighted Average Perpetual

Specific Identification
Note:   The April 12 sale comprised 55 units from beginning inventory and 180 units from the April 8 purchase. The April 27 sale comprised 30 units from the April 19 purchase and 65 units from the April 23 purchase.

1.   Gross profit, using FIFO, LIFO, weighted average, and specific identification.

Exercise 2-2
The following A. B. Murphy Company data show purchase and sales transactions for the month of April. A. B. Murphy uses a perpetual inventory system.

Compute the following:
1.   Cost of (1) goods available for sale and (2) number of units for sale.

2.   Number of units in ending inventory.

1.   Cost assigned to ending inventory, using any three of the following four methods. Compute costs using all four methods for distinguished performance. Round per unit costs to three decimal places and inventory balances to the nearest dollar.
a.   FIFO.
b.   LIFO.
c.   Weighted average.
d.   Specific identification (see note below).

FIFO Perpetual

LIFO Perpetual

Weighted Average Perpetual

Specific Identification
Note:   The April 12 sale comprised 55 units from beginning inventory and 180 units from the April 8 purchase. The April 27 sale comprised 30 units from the April 19 purchase and 65 units from the April 23 purchase.

1.   Gross profit, using FIFO, LIFO, weighted average, and specific identification.

A researcher randomly assigns 33 subjects to one of three groups. Group 1 receives technical dietary information interactively from an on-line website. Group 2 receives the same information from a nurse practitioner, while Group 3 receives the information from a video tape made by the same nurse practitioner.

The researcher looked at three different ratings of the presentation; difficulty, usefulness, and importance to determine if there is a difference in the modes of presentation. In particular, the researcher is interested in whether the interactive website is superior because that is the most cost-effective way of delivering the information.

1. Run the appropriate analysis of the data and interpret the results.

2. How could this study have been done differently? Why or why not would this approach be better?