I have to make a statement of cash flow for the Crosby Corp from our week 1 assignment but I am totally lost, i just don't understand how to accomplish this.
You will have to obtain it from information provided to you with the assignment, about that corporation.
"Cash flow" is money received minus money spent, running the business.
2×8=16
Creating a statement of cash flows may seem challenging at first, but I'm here to help you understand the process and guide you through it step by step!
A statement of cash flows is a financial statement that shows the inflows and outflows of cash from a company's operating activities, investing activities, and financing activities during a specific period of time. It provides valuable insights into the cash position and cash flow management of a company.
To begin, you'll need the following information:
1. Balance sheet: This statement provides the beginning and ending balances of the cash account. You'll need to note the cash balance at the beginning and end of the period you're preparing the statement for.
2. Income statement (or profit and loss statement): This statement shows the company's revenues, expenses, and net income (or loss) for the period. You'll need the net income figure from this statement.
3. Additional information: You'll need to gather information on cash transactions that occurred during the period, such as cash receipts and cash payments.
Now, let's discuss the three sections of the statement of cash flows:
1. Operating Activities:
In this section, you'll focus on the cash inflows and outflows related to the company's core business operations. To calculate the cash flows from operating activities, you can use either the direct or indirect method. The indirect method is more commonly used and involves adjusting net income for non-cash items and changes in working capital.
Start with the net income figure from the income statement. Then, analyze changes in operating assets and liabilities, such as accounts receivable, accounts payable, and inventory, to identify any cash inflows or outflows. Adjust the net income by adding or subtracting these items to arrive at the net cash provided (or used) by operating activities.
2. Investing Activities:
In this section, you'll focus on cash flows related to investments in long-term assets. Look for cash inflows from asset sales or disposals and cash outflows from asset purchases. Common items to consider include property, plant, and equipment; acquisitions or sales of businesses; and investments in stocks or bonds.
List these investing activities and calculate the net cash provided (or used) by investing activities.
3. Financing Activities:
Here, you'll focus on cash flows related to the company's financing sources and capital structure changes. Look for cash inflows from issuing stocks or bonds, borrowing money, or receiving cash from investors. Identify cash outflows from repaying debt, repurchasing stock, or paying dividends.
List these financing activities and calculate the net cash provided (or used) by financing activities.
Finally, reconcile the net cash provided (or used) by operating activities, investing activities, and financing activities to determine the net change in cash for the period. Add this to the beginning cash balance to arrive at the ending cash balance.
Remember that this is a simplified explanation of the process, and it may be helpful to consult your textbook or additional resources for more detailed guidance and examples.