Calculate free cash flow

Represents the cash a company generates after cash outflows to support operations and maintain its capital assets. Available once firm covered capital expenditures Often used

Link between IS, CF and BS

Cash flow statement  Reconcile beginning and ending balance of cash over accounting period  Link between CF and IS: Change in cash balance is results of 

Direct and redirect methods

Both method  Are permitted under US GAAP and IFRS  Most firm use indirect method  Representation of cash flows from investing and financing activities is exactly

Classify cash flow items

Cash flow from operating activities (CFO) (42) Inflows and outflows of cash resulting from transactions that affect a firm’s net income Cash flow from investing


Cash Flow statement provide: Information about cash receipt, cash payments during accounting period Info about company operating, investing and financing activities  Understanding of the impact