MGT220H5 Study Guide - Midterm Guide: Debt Service Coverage Ratio, Cash Flow Statement, Cash Cash
Document Summary
Ch 5 : financial position of cash flows. To access the firm"s ability to generate cash and cash equivalents. What was the change in the cash flow balance. Investing activities changes in long term assets and investments. Sale of debt or equity securities of other entities. Purchase of debt or equity securities of other entities. Financing activities changes in equity and non-operating liabilities. Reconciles net income to cash flows and affects only the operating activities section of the cash flow statement. Begin with net income from the income statement. Amortization is a non cash expense that reduces net income -> add amortization. Increases in current assets (other than cash) are subtracted from net income. Decreases in current assets are added to net income. Increases in current liabilities (other than dividends payable) are added to net. Decreases in current liabilities are subtracted from net income. Usefulness of the statement of cash flows: Provides creditors with useful info such as:
