It provides an overview of cash flow statement

1. Cashflow statement
SHAHEED BENAZIR
BHUTTO UNIVERSITY,
PAKISTAN
Course Instructor
Dr. Muhammad Wajid Raza
Assistant Professor at Shaheed Benazir
Bhutto University Dir Pakistan
Email; wajidrazauom@sbbu.edu.pk
Youtube Channel; excel tutorial with
wajid raza
Course: Analysis of Financial Statements

2. Overview of lecture
‛Definition
‛Importance of cash flow statement
‛Elements of cash flow statement
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3. Financial statements
‛Recall different types of financial statements
‛Income statement
‛Balance sheet
‛Cash flow statement
‛Statement of owners equity
‛Statement of retained earnings
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4. What is Cash flow statement
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‛A cash flow statement is
a financial statement that provides aggregate
data regarding all cash inflows a company
receives.
‛It also includes all cash outflows
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SHAHEED BENAZIR
BHUTTO UNIVERSITY
PAKISTAN
Inflow from
• Ongoing operations
• External investment sources.
Outflow to
• Business activities
• Investments during a given
period.

5. Positive cash flow, negative cash flow and net cash flow
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‛CASH FLOW STATEMENT Cash flow statement is the actual movement of cash into
and cash out of an organization.
‛The flow of cash into the business is called as cash inflow or positive cash flow.
‛Flow of cash out of the firm is called cash outflow or negative cash flow.
‛The difference between inflow and outflow of cash is the net cash flow.
SHAHEED BENAZIR
BHUTTO UNIVERSITY
PAKISTAN

6. Effect cash based accounting and accrual
based accounting on statements
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Accounting record is often kept either through
• Accrual based of accounting (the company policy allows for credit sales and purchase)
• Cash base accounting (all transaction are carried out on cash basis)
Most public companies use accrual accounting, which means the income statement is not the
same as the company's cash position.
The cash flow statement, though, is focused on cash accounting.

7. Objective of Cash flow statement
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SHAHEED BENAZIR
BHUTTO UNIVERSITY
PAKISTAN
1. To determine cash requirements.
2. To determine cash position (inflow &
outflow)
3. Efficient and effective cash management.
4. To identified liquidity position.
5. To help in dividend decisions
6. Provide information in proper manner.
What if a firm is recording high sales but
its cash inflow is very low? Is this firm
efficient?
Sales can be inflated by credit
agreements.

8. Main components of cash flow statement
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SHAHEED BENAZIR
BHUTTO UNIVERSITY
PAKISTAN
1. Three main components
of cash flow statement
• Operating cash flow,
• Investment cash flow
• Financing cash flow
The sum of these three
segments is called net cash
flow.
These three different sections of the cash
flow statement can help investors
determine the value of a company's stock
or the company as a whole

9. 9

10. Another
example
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11. Operating Cash flows
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SHAHEED BENAZIR
BHUTTO UNIVERSITY
PAKISTAN
• This section reports cash in flows and outflows that stem
directly from a company's main business activities.
• These activities may include buying and selling inventory
and supplies.
• Paying its employees their salaries.
• Companies with positive operating cash flow can plan
growth opportunities.
• Companies with negative operating cash flow often rely on
external financing for future projects
• Any other forms of
in and outflows such
as investments,
debts, and
dividends are not
included.

12. Example
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Add back non cash expenses

13. Investing activities
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1. Cash flow from investing activities is a section of the cash flow statement that
shows the cash generated or spent relating to investment activities.
2. Investing activities include purchases of physical assets, investments in securities,
or the sale of securities or assets.
Examples
Acquisitions of other businesses or companies. Proceeds from the sale of
other businesses (divestitures) Purchases of marketable securities (i.e., stocks,
bonds, etc.) Proceeds from the sale of marketable securities.

14. Example
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15. Financing activities
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What Is Cash Flow From Financing Activities? Cash flow from financing activities
(CFF) is a section of a company's cash flow statement, which shows the net
flows of cash that are used to fund the company. Financing activities include
transactions involving debt, equity, and dividends.
The financing activity in the cash flow statement
focuses on how a firm raises capital and pays
it back to investors through capital markets.
These activities also include paying cash dividends,
adding or changing loans, or issuing and selling
more stock.

16. Key Take Aways
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A cash flow statement provides data regarding all
cash inflows a company receives from its ongoing
operations and external investment sources.
The cash flow statement includes cash made by
the business through operations, investment, and
financing—the sum of which is called net cash
flow.
The first section of the cash flow statement is cash
flow from operations, which
includes transactions from all operational business
activities.
Cash flow from investment is the second section of
the cash flow statement, and is the result of
investment gains and losses.
Cash flow from financing is the final section, which
provides an overview of cash used from debt and
equity.

17. ‛Thank you so much….
‛If you have any questions feel free to contact me on my email address,
wajidrazauom@sbbu.edu.pk
‛Or watch the video lecture on excelwithsham and comment there.
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