The following information can a potential investor obtain from the cash flows operating activities:
1. The primary purpose of the statement of cash flows is to provide information about cash receipt, cash payments,and the net change in cash resulting from the operating,investing,and financial activities of a company during the period.
Cash flow from operating activities(CFO) is an accounting item that indicates the amount of money a company brings in from ongoing , regular business activities, such as manufacturing and selling goods or providing a service.Cash flow from operating activities does not include long term capital or investment costs.
CFO can be calculated as follows:
Cash flow from operating activities=EBIT+ Depreciation-Taxes+/-Change in Working Capital
It is also known as operating cash flow or net cash from operating activities.
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