An Analysis of Patterns from the Statement of Cash Flows: Various Aspects

Good Essays
In the article “An Analysis of Patterns from the Statement of Cash Flows”, the writers Benton E. Gup, William D. Samson, Michael T. Dugan, Myung J. Kim, and Thawatchai Jittrapanun discuss some of the various aspects of the Statement of Cash Flows. Prior to 1987, the Statement of Cash Flows was not a mandatory portion of financial statements (73). On a Statement of Cash Flows, there can be three types of cash flows: operating activities, financial activities, and investing activities; these activities can have either a positive or negative sign (73).
From 1971 to 1987, the Statement of Changes in Financial Position was used instead of the Statement of Cash Flows (73). Regardless of current requirements, several variations are seen in the organization of the Statement of Cash Flows due to stimulated investigation to find more beneficial structures (73). With the positive or negative outcomes of all the cash flow activities, lots of information can be gathered from the various patterns (73). There can be eight different possibilities when it comes to cash flow arrangements (74). Operating activities comes from in-house events such as gaining assets, repaying liabilities as well as distributing dividends to stockholders (74). Investing activities are based on cash arrivals from funding as well as asset growth (74). Financing activities are cash flows gathered by operating events that provide money to pay back various people such as investors and creditors (74). The first format of cash flows is positive on all activities (74). This is not a normal pattern as all are gaining some earnings. The company in question would be earning a profit while selling some of their assets as well as acquiring more debt and leverage (74). The second format is positive, negative, and negative (operational activities, investment activities, financial activities) , which means the company is earning a profit while putting some money into investments as well as paying off

You May Also Find These Documents Helpful

  • Powerful Essays

    Analysis of Cash Flows Statements By Song Hanxiao Pace University – New York Campus MBA 640, 72052 Fall 2011 John Paul Required Research Paper Contents Abstract --------------------------------------------------------------------------------------------------------3 | I. Introduction of importance of Cash Flows statements -------------------------------------4 | II. Function of Cash Flow Statements -----------------------------------------------------------5…

    • 2333 Words
    • 10 Pages
    Powerful Essays
  • Powerful Essays

    Cash Flow Statement

    • 3707 Words
    • 15 Pages

    accounting, a cash flow statement, also known as statement of cash flows or funds flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of an enterprise during a period. Essentially, the cash flow statement is concerned…

    • 3707 Words
    • 15 Pages
    Powerful Essays
  • Better Essays

    Statement of Cash Flow

    • 1315 Words
    • 6 Pages

    Statement of Cash Flow Claudette Elliott, Lavern George, Tristan Hampton, Meagan Jones, dawn Prichard ACC/421 December 5, 2012 Paul Andoh Statement of Cash Flow The importance of cash the cash flow statement help businesses and creditors understand how liquid a company is. Team A discussed some important factors about the statement of cash flow. The purpose of the statement of cash flow and how it is used in accounting is explained. The direct and indirect method of preparing a statement…

    • 1315 Words
    • 6 Pages
    Better Essays
  • Good Essays

    Statement of Cash Flows

    • 725 Words
    • 3 Pages

    Statement of Cash Flows ACC 421: Intermediate Accounting I Instructor: Roger Beckstead Saturday, December 6, 2008 UOP In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows a company's incoming and outgoing money (sources and uses of cash) during a time period (often monthly or quarterly and also yearly). The statement shows how changes in balance sheet and income accounts affected cash and cash equivalents, and breaks the analysis…

    • 725 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Statement of Cash Flows

    • 1199 Words
    • 5 Pages

    Statement of Cash Flows STATEMENT OF CASH FLOWS 1 The Statement of Cash Flows is a very viable and helpful resource. Decision makers use the Statement of Cash Flows in many instances to assess the viability of a firm. Within the statement are many types of elements that are incorporated to create the complete Statement of Cash Flows. Also within the statement is what is known as the inflows and outflows. In some cases, activity notes may be incorporated to help complete…

    • 1199 Words
    • 5 Pages
    Powerful Essays
  • Better Essays

    Cash Flow Statement

    • 2160 Words
    • 9 Pages

    changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities. Fundamental principle in IAS 7 All entities that prepare financial statements in conformity with IFRSs are required to present a statement of cash flows. [IAS 7.1] The statement of cash flows analyses changes in cash and cash equivalents during a period. Cash and cash equivalents comprise cash on hand and…

    • 2160 Words
    • 9 Pages
    Better Essays
  • Better Essays

    Statement of Cash Flow

    • 2304 Words
    • 10 Pages

    Statement of cash flows Cash is the blood of a business – it has to flow evenly. Holding plenty of cash is never a bad thing but there are exceptions to this as well. On the other hand, too much outflow in one area is the equivalent of getting shot and seeing blood pour out from the hole. The basic and key idea is that cash is what a company needs to be healthy and generate earnings. What Is Statement of Cash Flows? The Statement of Cash Flows (SCF) is distinct from the Statement of Comprehensive…

    • 2304 Words
    • 10 Pages
    Better Essays
  • Good Essays

    Statement of Cash Flows

    • 868 Words
    • 4 Pages

    Statement of Cash Flows Larry D. Abernathy ACC 421/Intermediate Financial Accounting I Richard Burden Statement of Cash Flows The facts contained in the balance sheet and the profit and loss statement is connected by the bridge that is the statement of cash flows. By recording the flow of cash and cash equivalents into and out of the company the statement of cash flow is a good indicator of a company’s health. Thus, the purpose of the statement of cash flow…

    • 868 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Statement of Cash Flows

    • 847 Words
    • 4 Pages

    Technical Summary IAS 7 Statement of Cash Flows as issued at 1 January 2012. Includes IFRSs with an effective date after 1 January 2012 but not the IFRSs they will replace. This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity…

    • 847 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Statement of Cash Flows

    • 726 Words
    • 3 Pages

    RUNNING HEADER: STATEMENT OF CASHE FLOWS Statement of Cash Flows: Purpose and Contained Information Veronica Jackson University of Phoenix November 29, 2010 Statement of Cash Flows The statement of cash flows serves multiple purposes. One is providing information about a company’s cash payments and receipts during a given period. A second purpose is to provide cash-basis information about the company’s operating, financing, and investing activities. Its format reconciles the beginning…

    • 726 Words
    • 3 Pages
    Good Essays