18MBO409T - Finance For Engineers UNIT 1
4M:
Activities in the cash flow statement ( Any 2 can be asked as 4m)
Operating Activities:
These cash flows arise from the activities a business uses to produce net income.
Examples include cash sources from sales, payments for operating expenses (such as salaries and utilities), and interest and dividend revenue.
Operating activities are crucial for assessing a company’s profitability and sustainability.
Investing Activities:
These cash flows are related to a business’ investments in long-term assets.
Examples include payments for purchasing land, buildings, equipment, and other investment assets.
Cash receipts from selling these assets are also part of investing activities.
Capital expenditures (improvements to existing assets) fall under this category.
Financing Activities:
These involve cash flows related to a company’s financing and capital structure.
Examples include issuing or repaying debt (such as bonds or loans) and issuing or repurchasing company stock (equity).
Payment of dividends to shareholders and proceeds from new stock issuance are also part of financing activities.
These activities impact the company’s overall financial health and capital base.
Proforma of the balance sheet and the income statement
Format and example
Notes:
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