ECON 10B Lecture Notes - Lecture 3: Current Liability
Document Summary
Negative cash ows = more cash going out then going in (sign that the company is in trouble) *note* the calculation of free cash ow does not include nancing acitivities. A: it indicates the sources of cash and uses of cash. It helps us, in a way, to predict and project what will likely happen in the future. A: we add the loss back to the net income on the statement of cash ows. A: free cash ow is taking the net increase in cash from the operating section then subtracting investment made in long term assets then subtracting dividends paid to shareholders. What is left is free money to use for business expansion or increasing dividend payments. Designed to produce managers and owners with information to help them run their business in a more pro table manner. Purpose is for only the internal users (those who participate in the operations of the business)
