BUS 251 Chapter Notes - Chapter 5: Cash Flow Statement, Cash Cash, Cash Flow

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Steve Gibson

Document Summary

Users will look at the operating activities to see whether it is generating a positive cash flow because this is the factor determining growth. Under the financing activities, the user can see the company"s decisions to issue shares and borrow bank loans to generate cash then pay dividends and repay loan financial strength and strategy. Under the investing activities, the users can see what investment the company made on long-term assets or long-term ownership of other companies access investment strategy. Cash-to-cash cycle show the lead/lag relationship between cash outflow and no inflow but increase in a/r: example: one month lag for inventory to arrive and one month lag to receive a/r. High-growth rates: the start up companies usually have rapid growth of sales buy more inventory expand storage and operating capacity need cash lead/lag relationship. Inadequate capitalization: companies don"t collect enough cash in the beginning.