Chapter 6 - Understanding cash flow statements. This chapter compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items, describe how non-cash investing and financing activities are reported, contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and . generally accepted accounting principles (. GAAP), | Chapter 6 Understanding Cash Flow Statements Presenter’s name Presenter’s title dd Month yyyy Customization notes: The third section of this presentation shows a simple example of how to prepare a statement of cash flows. Depending on the sophistication of the audience, that section can either be deleted (if the audience is already proficient in preparing the statement of cash flows) or expanded to include more complex examples (if the presenter wants to emphasize statement preparation and has additional time for the presentation). LEARNING OUTCOMES Compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items. Describe how non-cash investing and financing activities are reported. Contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and . generally accepted accounting principles (. GAAP). Distinguish between the direct and indirect methods of presenting cash from operating activities and describe the arguments in favor of each method. Describe how the cash flow statement is linked to the income statement and the balance sheet. Describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data. Convert cash flows from the indirect to direct method. Analyze and interpret both reported and common-size cash flow statements. Calculate and interpret free cash flow to the firm, free cash flow to equity, and performance and coverage cash flow ratios. 1 overview Statement of Cash Flows: Overview Format of Statement of Cash Flows Preparing a Statement of Cash Flows Additional Analytical Considerations Copyright © 2013 CFA Institute 2 2 Copyright © 2013 CFA Institute 3 LOS. Describe how the cash flow statement is linked to the income statement and the balance sheet. LOS. Analyze and interpret both reported and . | Chapter 6 Understanding Cash Flow Statements Presenter’s name Presenter’s title dd Month yyyy Customization notes: The third section of this presentation shows a simple example of how to prepare a statement of cash flows. Depending on the sophistication of the audience, that section can either be deleted (if the audience is already proficient in preparing the statement of cash flows) or expanded to include more complex examples (if the presenter wants to emphasize statement preparation and has additional time for the presentation). LEARNING OUTCOMES Compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items. Describe how non-cash investing and financing activities are reported. Contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and . generally accepted accounting principles (. GAAP). Distinguish between the direct and
