Analysis Using the Statement of Cash Flows

Learning objectives

After studying this chapter, you should be able to:

Explain the purposes and uses of the statement of cash flows.
Describe the content of the statement of cash flows and where certain items would appear on the statement.
Describe how to calculate cash flows from operating activities under both the direct and indirect methods.
Prepare a statement of cash flows, under both the direct and indirect methods, showing cash flows from operating activities, investing activities, and financing activities.
Analyze a statement of cash flows of a real company.
Analyze and use the financial results–cash flow per share of common stock, cash flow margin, and cash flow liquidity ratios.
Use working paper to prepare a statement of cash flows (appendix).