FIN 4504 Lecture Notes - Lecture 14: Operating Cash Flow, Cash Flow, Financial Statement
Document Summary
Income statement- statement showing firm"s revenues and expenses during specified period (over a time period) Based on accrual accounting method: recognizing all revenues and expenses whenever they occur (doesn"t matter whether you get the cash payment or not) Cash accounting method: revenue and expenses occurs when you get the cash payment. Depreciation is non-cash expense: balance sheet- accounting statement of firm"s financial position at a specified time (particular point of time ex. Help a firm run day-to-day operations and generate revenues. Listed in order of decreasing liquidity (cash is the most liquid) Inventories: raw materials and unsold products: statement of cash flows- financial statement showing firm"s cash receipts and cash payments during specified period (over a time period ex. Operating cash flow- cash generated from day-to-day operations. Cash flow from investments- cash generated or paid for investment activities. Cash flow by (used for) financing activities- shareholders and debt-holders: net income dividends and retained earnings.
