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12 Cards in this Set
- Front
- Back
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CFO
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reports cash generated from sales and the cash used in the production process. These items essentially flow through the firm's income statement and working capital accounts
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CFI
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Reports the cash used for property, plant, and equipment; investments, aquisitions, and the cash generated from sale of business or assets
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CFF
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reports capital structure transactions
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Direct method : Cash collections
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Net sales + change in A/R + cash advances from customer
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Direct method : Cash inputs
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-COGS + change in A/P + change in inventory + change other liabilities
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Direct method : Cash expense
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-wages expense + change wages payable + change in R+D + change in SGA
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Direct method : Cash interest
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-interest expense + change in interest payable
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Direct method : Cash taxes
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-taxes expense + change in taxes payable + change in deferred tax
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Indirect method steps
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1. Begin with NI
2. subtract gains/losses that result from financingor investing activities (usually found on income statement) 3. Add/subtract all noncash charges to income (depreciation + goodwill) 4. Add/subtract changes in operating accounts 5. Calc CFF and CFI |
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Primary factors causing discrepancies between Operating assets and cash flow statement
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1. Mergers and aquisitions
2. Exchange rate fluctuations on foreign exhcange |
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Free cash flow (FCF)
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=operating cash flows - net capital expenditures
if asked for free cash flow to the firm add back Int X (1-t) |
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US vs IAS GAAP
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US GAAP
Dividends paid - CFF Dividends rec - CFO IAS GAAP Div paid - may be CFF or CFO Int. + div rec - may be CFO or CFI Int. pad - may be CFO or CFF |
