Join Jim Stice for an in-depth discussion in this video Using cash flow data to highlight important accounting assumptions: direct, part of Running a Profitable Business: Understanding Cash Flow.
- Let's practice using the Jim Stice…Operating Cash Flow Matrix to convert income statement data…into operating cash flow data.…Here are the Income Statement numbers for scenario one…entered into the matrix.…Now 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 one…as of the end of last year and as the end of this year.…
To compute operating cash flow…we will systematically review each number…in the Income Statement and convert it…into a cash flow number.…Let's start with sales.…Were all of these sales for cash?…Well, we could look at the Balance Sheet to tell us.…Note that Accounts receivable increased by $130…during the year.…This represents cash not collected.…So the total amount of cash collected from customers…is 270.…We have used Income Statement and Balance Sheet data…
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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