ACC 312 Study Guide - Midterm Guide: Cash Flow, Management Accounting, Income Statement
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Financial officer (cfo), controller, or accountant: one way to analyze a statement of cash flows is to first look at the sour(cid:272)es a(cid:374)d uses of fu(cid:374)ds ide(cid:374)tified (cid:271)y (cid:272)o(cid:373)pari(cid:374)g last year"s (cid:271)ala(cid:374)(cid:272)e sheet (cid:449)ith this year"s (cid:271)ala(cid:374)(cid:272)e sheet. The dollar or percentage variance shows changes from previously experienced levels, and will give you an indication of whether your numbers are improving, declining, or staying the same. To calculate the variance in investing activities, you would use the following formula: Investing activities this year investing activities last year =variance. The percentage variance for investing activities is determined as follows: (investing activities this year investing activities last year)/investing. An alternative and shorter formula for computing the percentage variance is as follows: Free cash flow is simply the amount of cash a business generates from its operating activities minus the amount of cash it must spend on its investment activities and capital expenditures.
