Financial Accounting: A User Perspective 6th Canadian Edition

chapter 5

THE STATEMENT OF CASH FLOWS

USER RELEVANCE

WHY ANOTHER FLOW STATEMENT?

Ajax Company Example

Performance Evaluation Using the Statement of Earnings and Statement of Cash Flows

Solutions to the Cash Flow Problem

UNDERSTANDING THE STATEMENT OF CASH FLOWS

Definition of Cash and Cash Equivalents

Components of Cash Flows

Financing Activities

Investing Activities

Operating Activities

PREPARING THE STATEMENT OF CASH FLOWS

An Intuitive Approach to the Preparation of a Statement of Cash Flows

Determining the Cash Flows from Operating Activities

Determining the Cash Flows from Financing and Investing Activities

INTERPRETING CASH FLOW INFORMATION

An Analysis of Le Château's Statement of Cash Flows

SUMMARY

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Understand the importance of cash, and cash flow management, to a company's financial health.
2. Explain the relationship between the statement of cash flows and the statement of earnings, and how both are used in assessing management performance.
3. Explain lead/lag relationships, in terms of the cash-to-cash cycle for a retail company.
4. Describe some solutions to common cash flow problems.
5. Identify the three major types of activities that are disclosed in a statement of cash flows, and describe the components of each activity.
6. Prepare a statement of cash flows, using a comparative statement of financial position and a statement of earnings.
7. Interpret a statement of cash flows and use the information from it and ...