Chapter 6
The Statement of Cash Flows
IN THIS CHAPTER
Exploring the statement of cash flows
Understanding operating activities
Getting a grip on investments
Figuring out the financing section
Looking at other line items
Finding net cash from all company activities
Cash is a company’s lifeblood. If a company expects to manage its assets and liabilities and to pay its obligations, it has to know the amount of cash flowing into and out of the business, which isn’t always easy to figure out with accrual accounting. (You can find out more about accrual accounting in Book 1, Chapter 1.)
The reason why accrual accounting makes it hard to figure out how much cash a company holds is that cash doesn’t have to change hands for the company to record a transaction. The statement of cash flows is the financial statement that helps the financial-report reader understand a company’s cash position ...
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