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Cash Flow Statements (Cash flows from operating activities (Examples (Cash…
Cash Flow Statements
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Structure
Comprises three main sections showing all the cash items which generate the net increase or decrease in cash and cash equivalents
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Shows changes in cash and cash equivalents over a financial period and serves as an analytical tool to enable users of accounts to review the past years cash movements and year end cash position assess the viability of a business in terms of liquidity, solvency and financial adaptability
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Provides additional information to supplement the other two primary financial statements giving a different view on the performance of the business
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Financing activities include the issuance of ordinary shares to raise equity finance, repayments of short and long term borrowings, proceeds from short and long term borrowings and finance leases
Cash flows from investing activities include the acquisition and disposal of long term assets including PPE and intangible assets and acquisitions and disposals of shares in joint venture, associates and other investments
Cash flows relating to dividends paid to equity holders are also generally included in the financing activities section
Entities must disclose the components of cash and cash equivalents and present a reconciliation of the amounts in its statement of cash flows with the equivalent items reported in the SOPF. There tendency in the UK recommended by the FRC although it is not compulsory to give an analysis of net debt as part of the reconciliation
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