Join Jim Stice for an in-depth discussion in this video Usefulness of operating cash flow data when large losses are reported, part of Running a Profitable Business: Understanding Cash Flow.
- Here are the income statement numbers for scenario three,…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 the 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 C, as of the end of last year,…and as of the end of this year.…Now, there is something new in scenario C.…This company sold the building they share…and reported a large loss on the sale.…
As a result, the income statement shows a net loss,…instead of net income.…Let's review each adjustment necessary in the matrix…to convert the income statement numbers…into cash flow numbers.…With this loss, we need to be careful.…If not, there's a good possibility that we are going…to miss this one, so look at depreciation.…We add it back, because it's a non-cash item,…subtracted in the computation of net loss.…Accounts receivable, the increase…
Released
9/16/2015Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
- 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
Duration
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with Eddie Davila1h 33m Intermediate
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Introduction
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Welcome1m 45s
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1. The Importance of Cash Flow Analysis
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2. Overview of the Statement of Cash Flows
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3. Using Cash Flow Data to Make a Loan Decision
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Company A: Help!4m 13s
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Company B: Strange2m 4s
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Company C: Normal2m 38s
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Company D: Cash cow2m 30s
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4. Converting Income Statement Data into Operating Cash Flow Data
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5. Managing Cash Flow
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Managing operating cash flow5m 24s
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Managing investing cash flow4m 59s
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Managing financing cash flow3m 55s
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6. Cash Flow Numbers for Some Real Companies
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The danger of free cash flow3m 56s
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Conclusion
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Wrap-up2m 36s
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Video: Usefulness of operating cash flow data when large losses are reported