The cash flow statement may be the most informative of the four standard financial statements. Therefore, you will study this statement in detail. You will classify cash sources and uses by type of business activity. How corporations account for investments, long-term assets, and intangibles will be discussed.
We will also introduce comparative analysis, using horizontal and vertical techniques as well as standard financial ratios and other calculations. Financial ratios can be used to evaluate a corporation's performance compared with past performance as well as the performance of industry peers.
After completing this week, you should be able to
Describe Some Special Issues in Accounting for Long-Term Assets
Explain the Purpose of the Statement of Cash Flows
Differentiate between Operating, Investing, and Financing Activities
Prepare the Statement of Cash Flows Using the Indirect Method
Prepare the Completed Statement of Cash Flows Using the Indirect Method
Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency
Prepare a Completed Statement of Cash Flows Using the Direct Method