COMM-1106EL Chapter Notes - Chapter 5: Accounts Receivable, Promissory Note, Free Cash Flow
6 Dec 2016
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Chapter 5 the tate(cid:373)e(cid:374)t of cash flows. The use of accrual accounting means that the revenues and expenses on the statement of income do not correspond to the company"s cash flows and therefore do not provide all of the information that creditors need. The statement of cash flow categorizes the inflows and outflows of cash into operating, investing, and financing activities. On a historical basis (how they performed prior) the statement of cash flows enables users to: Assess the company"s ability to generate cash flows from its core operations. Evaluate the cash flows the company has been able to obtain from investors (through the issuance of new shares) and creditors (through new borrowings) Assess the extent to which the company has invested cash to replace or add revenue-generating assets such as property, plant, and equipment. Determine the amount of cash dividends distributed to shareholders, together with the sources of that cash.
