Lecture

Cash Flow Statement: Understanding Financial Flows

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In course

FIN-411: Accounting for finance

The objective of the course is to provide participants with accounting mechanisms for understanding and anaalyzing the financial statements of a company. ...

Description

This lecture covers the importance of the cash flow statement in assessing liquidity, the distinction between cash inflows and outflows, and how profit does not always equal cash due to working capital dynamics. It also delves into the relationships among financial statements and provides practical examples of cash flow statements in action.

Official source

Ontological neighbourhood

Business

Accounting: Financial accounting

Related concepts (32)

Financial statement

Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to understand. They typically include four basic financial statements accompanied by a management discussion and analysis: A balance sheet or statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.

Income statement

An income statement or profit and loss account (also referred to as a profit and loss statement (P&L), statement of profit or loss, revenue statement, statement of financial performance, earnings statement, statement of earnings, operating statement, or statement of operations) is one of the financial statements of a company and shows the company's revenues and expenses during a particular period. It indicates how the revenues (also known as the “top line”) are transformed into the net income or net profit (the result after all revenues and expenses have been accounted for).

Cash

In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is kept in a wallet. Current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately (as in the case of money market accounts). Cash is seen either as a reserve for payments, in case of a structural or incidental negative cash flow or as a way to avoid a downturn on financial markets.

Intangible asset

An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. This is in contrast to physical assets (machinery, buildings, etc.) and financial assets (government securities, etc.). Intangible assets are usually very difficult to value. They suffer from typical market failures of non-rivalry and non-excludability. Today, a large part of the corporate economy (in terms of net present value) consists of intangible assets.

Consolidated financial statement

Consolidated financial statements are the "financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent company and its subsidiaries are presented as those of a single economic entity", according to International Accounting Standard 27 "Consolidated and separate financial statements", and International Financial Reporting Standard 10 "Consolidated financial statements".

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