Cash Flow Statement Essay Example | Topics and Well Written Essays - 500 words

Cash Flow Statement - Essay ExampleThe secondary objective is to disclose teaching about the operating financing and investing activities of a company during an accounting systeming period. The statement of cash precipitate gives an indication about the relationship between winability and cash generating ability and thus the quality of profit earned. In brief, cash flow serves the following purposesUnder this method cash flow from operating activities is cipher on the basis of shed light on profit as reported in the profit and loss account or balance sheet and is especially used when amount of sales is not given in the question. Few adjustments made under this method are as followsFor calculating operating profit ahead working capital changes, non cash and non operating items (such as depreciation, doubtful debts, dividend, and interest) are added back. The non operating incomes and gains are deducted from the net profit for the year.Decrease in current assets and increase in current liabilities is added back and increase in current assets and Decrease in current liabilities is deducted from the operating profit before working capital changes to take at cash generated from operations.