Using balance sheets and income statements, accountants are able to draw up statements of cash flows that detail the areas where cash is being generated and “burned” by a business.
This eCourse consists of three modules. Module 1 explains the importance of the statement of cash flows in assessing a company’s performance and future prospects. This depends not so much on earnings for the period, but more realistically on cash flow. The module identifies the key elements of the statement of cash flows and how these statements are prepared.
Module 2 looks at the three main sections of the statement of cash flows – operating cash flows, investing cash flows, and financing cash flows and uses real life examples of companies statements of cash flows to explore these areas. The tutorial also examines the metrics used by analysts to assess a company’s cash flow performance.
Module 3 covers the three-statement model, which is a key financial statement forecasting tool used by analysts worldwide. In this module, you will learn how an analyst sets up this kind of model, where they get the information from, and how they make the assumptions that are crucial to the model. Note that, while this module covers all steps in setting up the model in detail, an actual working model in Excel is not covered here.
On completion of this course, you will be able to:
- Recognise the importance of cash to a business
- Identify the three main sections in the statement of cash flows
- Calculate cash from operating activities using the indirect method
- Identify the three key sources of company cash flow of interest to financial analysts
- Recognise the importance of cash flow performance and solvency metrics in assessing the strength of a company’s cash flow
- Recognise the importance of the three-stage model in company financial analysis
- Identify the key steps in the model in generating forecast financial statements for a company
Topic 1: Overview of the Statement of Cash Flows
Topic 2: Format of the Statement of Cash Flows
Topic 3: Determining Cash from Operating Activities
Module 2: Statement of Cash Flows ?Analysis
Topic 1: Analyzing the Statement of Cash flows
Topic 2: Cash Flow Metrics
Module 3: Three-Statement Modeling
Topic 1: The Three-Statement Model