BU397 Lecture 11: Statement of Cash Flows
Document Summary
An increase in an asset will always reduce cash flow. A decrease in an asset will always increase cash flow. An increase in a liability or equity will always increase cash flow. A decrease in a liability or equity will always decrease cash flow. * think about it inventory increases, you will use cash to pay for it, therefore decrease in cash. Cash flow statement: the cash flow statement provides information about: the cash receipts (cash inflows), and, uses of cash (cash outflows) during the year. Inflows and outflows are reported for: operating activities investing activities, and financing activities during the year. Cash flows from business perspective: a lack of cash flow is one of the main causes of bankruptcy. A sign of a healthy company is positive cash flows from operations: over the years, the statement of cash flows has grown in importance.
