MGT120H5 Chapter Notes - Chapter 10: Current Asset, Retained Earnings, Cash Flow

• School: UTM
• Department: Management
• Course: MGT120H5
• Professor: Catherine Seguin

Document Summary

Chapter 10 the statement of cash flows. Use of cash flo(cid:449) state(cid:373)e(cid:374)t; operati(cid:374)g, i(cid:374)(cid:448)esti(cid:374)g & fi(cid:374)a(cid:374)ci(cid:374)g acti(cid:448)ities; i(cid:374)direct method. Uses of the statement of cash flows. This statement includes details about a company"s cash receipts & cash disbursements from operating, investing & financing activities. It permits a user to determine exactly what caused the company"s cash balance to increase or decrease during the period. High income tends to lead to increases in cash, and low levels tend to lead to decreases in cash. A company"s cash flow can, however, suffer even when net income is high, or improve when it suffers a net loss. On the statement of cash flows, cash means cash & cash equivalents. These are short-term investments that are readily convertible to known amounts of cash, that are unlikely to change in value. Generally, only investments with maturities of 3 months or less meet this criterion (such as money- market investment accounts or 3-month treasury bills).