![]() ![]() ![]() You can easily figure out the required Cash and Cash equivalents amount using following equation:Ĭash and Cash Equivalents = Total Liabilities + Shareholder’s equity “Total Assets (Except Cash and Cash Equivalents) One need not make detailed cash flow account as per annual report of the company. Making an exact cash flow statement with all line items as per annual report of the company is an excellent idea but it requires a lot of accounting information of the company and as an Analyst, you always lack the information required to make a detailed cash flow statement.Īs an Analyst you only need to have the balancing figure of “Cash and Cash equivalents” to tally the balance sheet and to compute the required figure. If you have done financial modelling, you will know that making right cash flow statement is one of the critical tasks in the process of valuation of the company. Potential employees or contractors, who need to know whether the company will be able to afford compensation Potential investors, who need to judge whether the company is financially sound ![]() Potential lenders or creditors, who want a clear picture of a company’s ability to repay People and groups concerned with cash flow statements include:Īccounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. The statement captures both the current operating results and the accompanying changes in the balance sheet. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. In financial accounting, a Cash Flow Statement, also known as Statement of Cash Flow, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. ![]()
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