Contact Hour 19

Cash Flow Statement

MBA ZC415: Financial & Management Accounting
09/10/2017
BITS Pilani Instructor: Prof. Mahalakshmi Mudliar
PIOMA PLASTICS
 Opening Cash Balance 13,300
PIOMA PLASTICS Closing Cash Balance 8,300
Decrease in Cash Balance (5000)
PIOMA PLASTICS
SCHEELER COMPANY
SCHEELER COMPANY
Healthy cash flow

Positive cash flow from operating activities

Negative cash flow from investing activities

Positive or negative cash flow from financing activities (which may move back or forth over time)

BITS Pilani, Deemed to be University under Section 3, UGC Act

Interpreting the Statement of Cash Flows: Some
Questions to Ask

Did the company generate cash from operations?

– What did the company do with the cash?
Did the company lose cash in operations?
– How did the company finance the loss of cash?
How did the company finance capital expenditure and acquisitions?
Did the company engage in major disposals?
Does the company have reasonable financial flexibility?
Did the company draw heavily on its cash?
Does the company have large cash?
How do you rate the company’s earnings quality?

BITS Pilani, Deemed to be University under Section 3, UGC Act

In short

Change in Account Balance during Period

Increase Decrease

Current Subtract from Add to

Noncash Assets net profit net profit

Current Add to Subtract from

Liabilities net profit net profit

BITS Pilani, Deemed to be University under Section 3, UGC Act

 BITS Pilani

Thank you