After this video, learners will be able to list out the three types of cashflows: operating, investing, and financing.
- The third primary financial statement … is the statement of cash flows. … Conceptually, the statement of cash flows is quite simple. … Cash in, cash out. … The insight of accountants is to separate those cash flows … into three categories, … operating activities, investing activities, … and financing activities. … Those three categories of cash flows … are what are reported in the statement of cash flows. … Now operating activities … are what companies do every single day. … They collect cash from customers, … they pay cash to buy inventory, … they pay cash to employees, … for rent, for advertising, … for research and development. … All of those things are operating activities. … Think of operating activities as the things … that a business does every single day and hopefully, … a company would generate cash from its operating activities. … You would hope that a business would be collecting more cash … than it spends on a daily basis. … The second category in the statement of cash flows …
- Describe how decision-makers use accounting in a business.
- Recognize limitations in financial statement analysis.
- Relate the purpose of financial ratio analysis.
- Determine the primary reason for managing cash through the operating cycle.
- Define the role of efficiency in creating budgets.
- Identify differences between federal income tax and other taxes, such as state sales tax.