From the course: Reading Corporate Financial Statements

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The impact of operating activities on the cash flow statement

The impact of operating activities on the cash flow statement

From the course: Reading Corporate Financial Statements

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The impact of operating activities on the cash flow statement

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- Let's imagine we started the year with a million dollars in our cash account, but we just looked and we noticed that now at the end of the year we have $1.2 million in that account. How exciting, but why the increase? I want to know. In business, they say cash is king. I know that is true for me. So let's take a look at building the statement of cash flows, using the indirect method to show how and why the cash balance changed during the year. This financial statement can feel quite overwhelming so my goal is to make it simple so you know exactly how to prepare it. I want you to think about the statement of cash flows much like you think about your own personal cash. Some of your cash comes from having a job and getting a paycheck. We're going to call that operating cash flow. Some of your cash may come from your tenants who send you rent money every month. Let's call that investing cash flow. And some of your cash…

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