Class 07

Question 1

what does the CFS tell us and why?

Answer 1

shows cash movement since NI is accrual based

Question 2

what is CF from operations?

Answer 2

day to day transactions

Question 3

what is CF from investments?

Answer 3

fixed assets (long term)

Question 4

what is CF from financing?

Answer 4

liabilties + SE

Question 5

what are the CF exceptions?

Answer 5

1. interest revenue—operating
2. interest expense—operating
3. dividend revenue—operating
4. dividend paid—financing

Question 6

what are 2 types of CFS?

Answer 6

1. direct—daily cash operations
2. indirect—operations + investment + financing

Question 7

how do you do indirect CF?

Answer 7

NI + Dep. Exp + L/(G) + (CA) + CL = CFO

Question 8

what should be in CFS disclosures?

Answer 8

1. cash paid for income taxes
2. cash paid for interest
3. non cash investing + financing

Question 9

how to check the CFS is correct?

Answer 9

the value matches the BS

Question 10

what is CF analysis?

Answer 10

1. current cash debt ratio = CFO / avg. CL
2. cash debt ratio = CFO / avg. TL
3. free cash flow = CFO - CapEx - D

Question 11

what is something to note for the exam?

Answer 11

confirm the beg + end values in the tables