Join Jim Stice for an in-depth discussion in this video Operating cash flow problems from high growth, part of Running a Profitable Business: Understanding Cash Flow.
- Here are the income statement numbers for scenario four…entered into the matrix.…Are these cash flow numbers?…No.…The income statement is a measure of economic…performance which is not necessarily the same as cash flow.…But we know that we can use balance sheet numbers to…convert these income statement numbers into cash flow…numbers.…Here are the relevant balance sheet numbers for the company…in scenario four as of the end of last year,…and as of the end of this year.…From the large increase in each of the balance sheet…items, we can see that this company…is growing very fast.…
So, the new thing to consider here with scenario four…is that we are going to see what happens to the…operating cash flow of a high-growth company.…Let's review each adjustment in the matrix.…First, we're getting used to this one, depreciation.…We add it back because it's a non-cash item.…It's subtracted in the computation of net income.…We add it back to get back to the cash flow number.…Now the sales adjustment.…Accounts receivable increased $60,…
Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
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- Differentiating between net income and operating cash flow
- Categorizing cash flow
- Using financial data to deduce cash flow
- Managing operating, investing, and financing cash flows
- Typical cash flow patterns
- Converting net income into operating cash flow
- Improving operating cash flow
Skill Level Intermediate
1. The Importance of Cash Flow Analysis
2. Overview of the Statement of Cash Flows
3. Using Cash Flow Data to Make a Loan Decision
4. Converting Income Statement Data into Operating Cash Flow Data
5. Managing Cash Flow
6. Cash Flow Numbers for Some Real Companies
The danger of free cash flow3m 56s
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