cash flow from OPERATING ACTIVITIES is positive, that is a good result.We have got the same result: our liquid assets have decreased at 10 K € (K = thousands)Īccording to our calculations we can make the following conclusions: This result we can check from the balance sheet through changes in cash and cash equivalents (CCE):Ĭhange in liquid assets = Cash in hand and at banks (balance 2018) - Cash in hand and at banks (balance 2019) = 20 – 10 = 10 change in cash and cash equivalents = A + B + C = 35 – 7 - 38 = -10.Dividends paid out = Retained earnings or loss (previous financial years) (balance 2018) + Profit (loss) of the financial year (balance 2018) - Retained earnings or loss (previous financial years) (balance 2019) = 20 + 18 -10 = 28.Loan repayments (reduction of loan) = Long-term creditors (balance 2019) - Long-term creditors (balance 2018) = 20 – 30 = -10.B = INVESTMENTS = Non-current assets 2019 + Depreciation 2019 - Non-current assets 2018 = 47 + 10 -50 = 7.Accounts receivable increase (-) / decrease (+) = Accounts receivable (balance 2019) - Accounts receivable (balance 2018) = 20 – 18 = 2 (increase).Depreciation (from income statement 2019) = 10.Net profit (data from profit and loss statement) = 28.
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Our calculations for cash flow statement (indirect method) are the following: + proceeds from the disposal of fixed assets Interest-free debts increase (+) / interest-free debts decrease (-) Inventory increase (-) / inventory decrease (+)Īccounts receivable increase (-) / accounts receivable decrease (+) paid financial income and expenses, taxes, etc. +/- other income and expenses without cash flow impact Indirect method (in Finnish, rahavirtalaskelma)Ĭash flow analysis structure looks as follows: Cash flow statement
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The cash-based purchases can be calculated as following:Ĭash-based purchases = Purchases + Accounts payable 1.1 – Accounts payable 31.12Īccording to our calculations we have got the following results: The cash-based turnover can be calculated as following:Ĭash-based Turnover = Turnover + Accounts receivable 1.1 - Accounts receivable 31.12Ĭash-based Turnover = 200 + 18 – 20 = 198 Similarly, if the payables related to purchases have decreased during the period, this means that in addition to the purchases made during the financial year obviously were spent more money on acquisitions (this change has been matched by additional money). If trade receivables have increased between the current and previous financial year, it means that the turnover did not consist entirely of cash, but part of it was committed to the account receivables. In a case if we would like to find out how much the company has earned during the financial year from sales and how much has spent on purchases, we have to analyze the changes in trade receivables and payables during the financial year. In order to make calculation we need the data from Income Statements and Balance Sheets. Let's consider the difference between received income statement data and cash flow report data using our hypothetical company X. The cash flow analysis works as a good assistant tool for traditional financial analysis. With cash flow analysis we can determine the cash-based income and expenses, i.e.
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The company's financial statements are prepared on an accrual basis, which means that income and expenses in the income statement are based on deliveries, payables and receivables rather than cash flows. Direct method (in Finnish, kassavirtalaskelma) Finrepo » Company's Financial Accounting » Financial Analysis, Main Indicators of the Financial Condition of the Company » Cash Flow Analysis: Direct and Indirect Methods Cash flow analysis: direct and indirect methods Key figures of cash flow statement Cash flow analysis.