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Financial Accounting_ Second Canadian Edition

VIEWS: 9 PAGES: 34

  • pg 1
									                Chapter 5
        Reporting and Interpreting Cash Flows


    Aside: before you record income you should be
   reasonably assured that you will be able to collect
                     the amount.




5-1                                 Financial Accounting, Second Canadian Edition
             Business Background
               Positive cash flows permit a company to . . .



                       pay dividends to             expand its
                           owners                   operations


                     take advantage of
                                                 replace needed
                           market
                                                     assets
                       opportunities.
                     Expand into other
                          markets




 Financial analysts consider cash flow an important indicator of a company’s
                               financial health.

   GAAP focuses on accruel income. Cash however is the lifeblood of the
  company. Without Cash we can’t survive, can’t pay employess, bills, etc.s
5-2                                               Financial Accounting, Second Canadian Edition
        Classifications on the Cash
             Flow Statement
   Cash                             Cash
Equivalents                                                            Currency




Short-term (90 or 30 days), highly liquid investments.
Readily convertible into cash.
So near maturity that market value is unaffected by interest rate changes.
Were not just talking Cash, rather highly liquid investments. *Not dependant on
market rates*.


5-3                                                    Financial Accounting, Second Canadian Edition
      Classifications on the Cash
           Flow Statement
  The Cash Flow Statement must include
        the following three sections:

   Operating Activities
   Investing Activities
   Financing Activities


5-4                        Financial Accounting, Second Canadian Edition
                      SLEEMAN BREWERIES LTD.
             Consolidated Statement of Cash Flows - Unaudited                          The indirect method is
                                                                                           used by most
                        As at September 27, 2003                                            companies.
                                                                                      This is the second way,
                                                                3 Months Ended        and we will focus on this
                                                                                       because it is the most
(All amounts in 000s)                                       September 27, 2003          used method. The
Net inflow (outflow) of cash related to the folowing activities                         other method is the
                                                                                        direct method. (only
Operating Activities
                                                                                          2/200 use direct
    Net earnings                                                      $ 4,359                  method)
    Items not affecting cash:
        Depreciation and amortization                                    1,648
        Future Income Taxes                                              1,590          Sleeman
    Changes in non-cash operating working capital items:                                Breweries
        Decrease in accounts receivable                                  5,209
        Decrease in inventory                                              440
                                                                                         uses the
        Decrease in prepaid expenses                                       881           indirect
        Decrease in accounts payable and accrued liabilities            (3,999)          method.
                                                                      $ 10,128



                             Statement continued . . .
 5-5                                                             Financial Accounting, Second Canadian Edition
                     SLEEMAN BREWERIES LTD.                                        This ending cash
                                                                                   balance should be
            Conslidated Statement of Cash Flows - Unaudited                        the same amount
                       As at September 27, 2003                                   that appears on the
                                                                                     balance sheet.
                                                      3 Months Ended              This is the bottom
(All amounts in 000s)                              September 27, 2003             half of the previous
                                                                                          page.
                                                              $ 10,128
                                                                                  It ends with net cash
Investing Activities                                                               flow and balance @
   Additions to property, plant, and equipment                   (1,350)              end of period. It
   Proceeds from long-term investments                              248                doesn’t have a
Net cash used in investing activities                            (1,102)              beginning of the
Financing activities                                                                   period. That’s
                                                                                  because the starting
   Net repayments of bank operating Loans                        (4,653)             cash flow is zero
   Stock options exercised                                           27                and has been
   Principal repayments on long-term obligations                 (2,430)          omitted. This is rare,
                                                                 (7,056)           and will normally be
NET CASH FLOW AND CASH BALANCE, END OF PERIOD                     1,970                    there.




  5-6                                                         Financial Accounting, Second Canadian Edition
           Cash Flows from
        1) Operating Activities


                       1st Section
      The section that directly relates to the Cash inflows and
        outflows that directly relate to income from normal
           operations reported on the income statement.




5-7                                          Financial Accounting, Second Canadian Edition
           Cash Flows from Operating Activities
   note: they have different starting points, and dfferent details in body,
    and *net cash flows from operating activities* is the same result of
                           both, with same value

 The Direct Method of presenting the Operating Activities section of
 the cash flow statement reports components of cash flows from
 operating activities as gross receipts and gross payments. Total
 cash brought in, total payments, etc. We need to dig a little deeper to
 get this information.
 The Indirect Method of presenting the Operating Activities section of
 the cash flow statement adjusts net income to compute cash flows
 from operating activities. Start with net income and adjust it for none-
 cash changes in income. Ex. Amortization: use of capital assets to
 achieve matching concept (this doesn’t reqiure cash). All the
 accruels and deferrals as they would have already been recorded.
 (ex: income accruel entry for something sold, but not yet paid for).
 Look for None cash income and charges (mainly gains and losses
 and amortization and accruels and defferrals)… and essentially make
 a cash income statement.
5-8                                                Financial Accounting, Second Canadian Edition
      Cash Flows from Operating
              Activities
  The CICA Handbook recommends the direct method,
  but it is rarely seen in practice. (remember 2/200 use
  indirect method). This is odd where the handbook
  recommends one choice but everyone chooses
  something else.
  Many financial executives have reported that they do
  not use it because it is more expensive to implement
  than the indirect method. Textbook questions give you
  the info, in real life its harder to get the info.



5-9                                    Financial Accounting, Second Canadian Edition
         Cash Flows from Operating Activities -
                    Direct Method
         Cash Inflows from:
    Sales to customers
    Interest and dividends received
       (buy inventory, utilities, payroll)
    (normal operations)
                                              +             Cash Flows
                                                               from
                                                             Operating
              Outflows to:                                   Activities
    Purchase goods (for resale) and
     services
    Salaries and wages                       _
    Income taxes
    Interest on liabilities


5 - 10                                        Financial Accounting, Second Canadian Edition
         Cash Flows from Operating
         Activities - Indirect Method
         The indirect method adjusts net income
             by eliminating non-cash items.
                 Changes in current assets and current liabilities
                  (depreciation added in to counteract us taking out
                  amortization). Must remove all the non-cash items
                         that were on our income statement.
                                                                               Cash Flows
 Net Income                                                                  from Operating
From income                                                                     Activities -
 statement
                                                                             Indirect Method
              + Losses and                   + Non-cash
                 - Gains                  expenses such as
                                            amortization

5 - 11                                                            Financial Accounting, Second Canadian Edition
             Cash Flows from Investing Activities

                  Inflows from:
 Sale or disposal of property, plant, and
  equipment.
 Sale or maturity of investments in securities

                                                  +              Cash
                                                                 Flows
                   Outflows to:
                                                                  from


     Purchase property, plant, and equipment.
     Purchase investments in securities.
                                                               Investing
                                                  _            Activities


    5 - 12                                        Financial Accounting, Second Canadian Edition
             Cash Flows from Financing Activities
       Where did we get money to do the investing section items?
                 Closely linked with investing section

                 Inflows from:
 Borrowing on notes, mortgages, bonds,
  etc. from creditors
 Issuing equity securities to shareholders   +             Cash
                                                            Flows
                                                             from
                 Outflows to:
 Repay principal to creditors (excluding
                                                          Financing
  interest)                                   _           Activities
 Repurchase equity securities from owners
 Pay dividends to shareholders




    5 - 13                                    Financial Accounting, Second Canadian Edition
Relationships to the Balance Sheet
    and the Income Statement
   Information needed to prepare a cash flow statement:
   1.   Comparative Balance Sheets (this period and last periods
        balance sheet so we can see the changes in these)
   2.   Income Statement (detailed, so we can pull out non-cash
        items, gains, losses, amortization)
   3.   Additional details concerning different types of
        transactions and events (not shown on financial
        statements: postings on individual accounts, possibly all
        the way back to the source journal entry)

   If you have a set of statements missing the cash flow
         statements then you have most of the tools needed to
         create one




5 - 14                                      Financial Accounting, Second Canadian Edition
         Relationships to the Balance Sheet and the
                     Income Statement
           the book skips this relationship a lot. Here we see
               cash assets + non-cash assets = total assets

  Cash = Liabilities Shareholders’
Equity Non-cash Assets (there are a lot of them)

                        Derives from thje always
                          balanced equation:

Assets = Liabilities Shareholders’ Equity

5 - 15                                             Financial Accounting, Second Canadian Edition
 Relationships to the Balance Sheet
     and the Income Statement
              Change in Account Balance During the Year
                   Increase             Decrease
 Current       Subtract from net
                                          Add to net income
  Assets            income
 Current                                  Subtract from net
               Add to net income
Liabilities                                    income
 Use this table when adjusting Net Income to Operating Cash Flows
                     using the indirect method.



 5 - 16                                   Financial Accounting, Second Canadian Edition
                 Cash Flow Statement
         Although the operating section can be prepared in one of the
          two formats (Direct or Indirect Method) we will discuss the
           Indirect Method, the method most commonly used, in the
                               following example.
           There will be a few Q’s on the direct method, but on exam
          short answer and computational will not be direct. Multiple
                          choice will be direct method.




   Using Sleeman Breweries Ltd., let us examine
    the preparation of the Cash Flow Statement
   for the quarter ended on September 27, 2003.

5 - 17                                          Financial Accounting, Second Canadian Edition
                    SLEEMAN BREWERIES LTD.
            Consolidated Statement of Earnings - Unaudited                   The Statement
                                                                             of Cash Flows
                                                      Quarter ended
(in thousands of dollars)                             Sept. 27, 2003
                                                                             will begin with
   Net revenue                                      $        53,091          Sleeman’s Net
Cost of Goods Sold                                           26,576
                                                                              income from
   Gross margin                                              26,515
Operating expenses:                                                          the Statement
Selling, general and administrative                          16,985           of Earnings.
Depreciation and amortization                                 1,648
   Total operating expenses                                  18,633
Operating income                                              7,882
Earnings before interest and taxes
   Interest expense                                           1,373
Income before taxes                                           6,509
   Provision for income taxes                                 2,150
Net income                                          $         4,359




   5 - 18                                                     Financial Accounting, Second Canadian Edition
                    SLEEMAN BREWERIES LTD.                                      The Net
            Consolidated Statement of Earnings - Unaudited
                                                                                income
                                                      Quarter ended           number will
(in thousands of dollars)                             Sept. 27, 2003
    Net revenue                                     $        53,091
                                                                              be adjusted
Cost of Goods Sold                                           26,576          for non-cash
    Gross margin                                             26,515              items.
Operating expenses:
Selling, general and administrative                         16,985
Depreciation and amortization                                1,648
    Total case of expenses
   In theoperatingSleeman’s, those adjustments included 18,633
                                                            depreciation and amortization
Operating income                       expense ($1,648)      7,882
Earnings before interest and taxes
   These numbers may not be obvious in the Income Statement, so often they must be
    Interest expense                                         1,373
     derived from other sources, such as the Notes to the Financial Statements, or the
Income before taxes                                          6,509
    Provision for income taxes    General Ledger Trial Balance.
                                                             2,150
Net income                                          $        4,359




   5 - 19                                                    Financial Accounting, Second Canadian Edition
                               SLEEMAN BREWERIES LTD.
                     Consolidate Statement of Cash Flows - Unaudited
                        For the Quarter Ended September 27, 2003
         (All amounts in 000s)
         Cash flows from operating activities:
             Net income                                                       $4,359


                      With the indirect method,
                     always 1) start with the net
                     income or net loss for the
                               period.
                   Next, adjust for the non-cash
                   items included in net income.
         Net cash provided by (used in) operating activities




5 - 20                                                   Financial Accounting, Second Canadian Edition
                       SLEEMAN BREWERIES LTD.
              Consolidated Statement of Cash Flows - Unaudited
                         As at September 27, 2003

                                                            3 Months Ended
   (All amounts in 000s)                                 September 27, 2003
   Cash flows from operating activities:
       Net earnings                                         $ 4,359
       Items not affecting cash:
           Depreciation and amortization                       1,648
           Future Income Taxes                                 1,590
       Changes in non-cash operating working capital items:
                      the Cash flows
   To completein accounts receivable from operating activities
          Decrease                                             5,209
          Decrease in must
    section, you inventoryexamine a comparative balance          440
            to determine expenses
   sheetDecrease in prepaid the changes in current assets 881    and
          Decrease in accounts payable beginning of the       (3,999)
   current liabilities from the and accrued liabilities period to
   Net cash provided by (used in) operating activities      $ 10,128
                       the end of the period.

5 - 21                                           Financial Accounting, Second Canadian Edition
     Now, make adjustments for changes in current assets and current
  liabilities using the decision table below. (page 234 of book for balance
     sheet on Sleeman. The book pushes the memorization of the chart)


                     Change in Account Balance During the Year
                           Increase            Decrease
          Current     Subtract from net
                                           Add to net income
           Assets           income
          Current                           Subtract from net
                      Add to net income
         Liabilities                             income

       Changes in non-cash operating working capital items:
           Decrease in accounts receivable (net)                                  5,209
           Increase in inventory                                                    440
           Decrease in prepaid expenses                                             881
           Decrease in accounts payable and accrued liabilities                  (3,999)
    Net cash provided by (used in) operating activities                        $ 2,531



5 - 22                                                   Financial Accounting, Second Canadian Edition
                              SLEEMAN BREWERIES LTD.
                     Consolidated Statement of Cash Flows - Unaudited
                                As at September 27, 2003
                                Add the $5,209 decrease in Accounts Receivable.
                                    A = L + SE    how did theis affect cash?
                                                                                  3 Months Ended
                                                 A/R is an asset
     (All amounts in 000s)                                                     September 27, 2003
                                               Cash + A/R = L + SE
     Cash flows from operating activities:
                 If A/R decreases -5209, with no change in L and SE, then Cash must be + 5209
         Net earnings                                                                      $ 4,359
         Items not affecting cash:
             Depreciation and amortization                                                     1,648
             Future Income Taxes                                                               1,590
         Changes in non-cash operating working capital items:
            Decrease in accounts receivable                                                    5,209
            Decrease in inventory                                                                440
                          Change expenses
            Decrease in prepaid in Account Balance During the Year                               881
            Decrease in accounts payable and accrued liabilities
                                   Increase                                Decrease           (3,999)
          cash provided Subtract from net activities
     Net Current            by (used in) operating                                         $ 10,128
                                                                   Add to net income
           Assets                   income
          Current                                                  Subtract from net
                           Add to net income
       Liabilities                                                          income

5 - 23                                                                Financial Accounting, Second Canadian Edition
                          SLEEMAN BREWERIES LTD.
                 Consolidated Statement of Cash Flows - Unaudited
                            As at September 27, 2003

                                                               3 Months Ended
    (All amounts in 000s)                                   September 27, 2003
    Cash flows from operating activities:
        Net earnings                                                  $ 4,359
        Items not affecting cash:
            Depreciation and in Inventory.                               1,648
   Subtract the $440 increaseamortization Decrease account balance, same as A/R
            Future Income Taxes                                          1,590
                     Inventory is an asset, so A = cash + inventory
        Changes in non-cash operating working capital items:
                              If Cash + Inventory = L + SE
           Decrease in accounts receivable                               5,209
           Decrease in inventoryup by +440 to match -440 on inventory
              Then Cash had to go                                          440
           Decrease in prepaid expenses                                    881
                       Change in Account Balance During the Year
           Decrease in accounts payable and accrued liabilities         (3,999)
    Net cash provided by (used in) operating activities
                                Increase                     Decrease $ 10,128
          Current      Subtract from net
                                                   Add to net income
           Assets           income
          Current                                  Subtract from net
                       Add to net income
         Liabilities                                    income
5 - 24                                              Financial Accounting, Second Canadian Edition
                           SLEEMAN BREWERIES LTD.
                  Consolidated Statement of Cash Flows - Unaudited
                              $881 September Prepaid Expenses.
                 Add back the As at decrease in 27, 2003
                           Cash + prepaid expenses = A
                                                                   3 Months Ended
                        So
     (All amounts in 000s) prepaid expense decreases by 881 September 27, 2003
                  Then we must increase
     Cash flows from operating activities:cash by 881 to balance it
         Net earnings                                                    $ 4,359
         Items not affecting cash:
             Depreciation and amortization                                  1,648
             Future Income Taxes                                            1,590
         Changes in non-cash operating working capital items:
            Decrease in accounts receivable                                 5,209
            Decrease in inventory                                             440
            Decrease in prepaid expenses                                      881
            Decrease in accounts payable and accrued liabilities
                  Change in Account Balance During the Year
                                                                           (3,999)
     Net cash provided by (used in) operating activities
                          Increase                  Decrease             $ 10,128
    Current        Subtract from net
                                             Add to net income
     Assets             income
    Current                                   Subtract from net
                   Add to net income
   Liabilities                                     income


5 - 25                                                 Financial Accounting, Second Canadian Edition
                             SLEEMAN BREWERIES LTD.
                    Consolidated Statement of Cash Flows - Unaudited
                               As at September 27, 2003

                                                        3 the Year
                        Change in Account Balance DuringMonths Ended
      (All amounts in 000s)     Increase             September
                                                    Decrease 27, 2003
      Cash flows from operating activities: net
          Current         Subtract from
          Net earnings                          Add to net income
                                                               $ 4,359
           Assets                income
          Items not affecting cash:
          Current                               Subtract from net
                         Add to net income
              Depreciation and amortization                      1,648
        Liabilities                                  income
             Future Income Taxes                                                      1,590
        Changes in non-cash operating working capital items:
             Decrease in accounts receivable                                          5,209
             Decrease in inventory                                                      440
             Decrease in prepaid expenses                                               881
             Decrease in accounts payable and accrued liabilities                    (3,999)
     Net cash provided by (used in) operating activities                           $ 10,128
   Subtract the $3,999 decrease in Accounts Payable and Accrued Liabilities. (from page 245)
          A/P + Accrued Liabilities decreased by 3,999 over the year, SE didn’t change.
We have to increase L by 3,999 and increase cash by 3,999 to balance it. (the plus miniuses here
                                       might be wrong)

 5 - 26                                                         Financial Accounting, Second Canadian Edition
                       SLEEMAN BREWERIES LTD.
              Consolidated Statement of Cash Flows - Unaudited
                         As at September 27, 2003

                                                                 3 Months Ended
 (All amounts in 000s)                                       September 27, 2003
 Net inflow (outflow) of cash related to the folowing activities
 Operating Activities
     Net earnings                                                      $ 4,359
     Items not affecting cash:
         Depreciation and amortization                                    1,648
         Future Income Taxes                                              1,590
     Changes in non-cash operating working capital items:
         Decrease in accounts receivable                                  5,209
         Decrease in inventory                                              440
         Decrease in prepaid expenses                                       881
         Decrease in accounts payable and accrued liabilities            (3,999)
                                                                       $ 10,128


                         Statement continued . . .
5 - 27                                                   Financial Accounting, Second Canadian Edition
                                       Investing section:
                               SLEEMAN BREWERIES LTD.
                    indicates that Statement of Cash Flows Unaudited
   The balance sheetConslidated Property, Plant and Equipment-(PPE) decreased by $1,350 during the
                                              quarter.
                                  As at September 27, 2003
      If PPE starts at 72,359 and ends at 72,693, the net change is an increase of 334$. We’re told they
    purchased 1,350. Thus, they amoritized the equipment by 1,016. That balances the eq’n). We break it
                        down because they appear in different sections of statements.
                                                                          3 Months Ended
                                                A = L + SE
         (All amounts in 000s)                                         September 27, 2003
                                     Cash + PPE(purchases) = L + SE
      Net cash provided by (used in) operating activities + 0
                               Changes: -1,350 + 13,50 = 0    $ 10,128
      Investing Activities
         Additions to property, plant, and equipment            (1,350)
     The other part of the amortization could be248
         Proceeds from long-term investments                        to                            the
                              intangible assets.
      Net cash used in investing activities                     (1,102)
      Financing activities
         Net repayments of bank operating Loans                 (4,653)
         Stock options exercised                                    27
         Principal repayments on long-term obligations          (2,430)
      Net cash provided by financing activities                 (7,056)
      NET CASH FLOW AND CASH BALANCE, END OF PERIOD              1,970


5 - 28                                                                  Financial Accounting, Second Canadian Edition
                              SLEEMAN BREWERIES LTD.
                     Conslidated Statement of Cash Flows - Unaudited
                                As at September 27, 2003

                                                               3 Months Ended
         (All amounts in 000s)                              September 27, 2003

          Net cash provided by (used in) operating activities      $ 10,128
          Investing Activities
             Additions to property, plant, and equipment             (1,350)
             Proceeds from long-term investments                        248
              cash used in investing activities                      (1,102)
          NetLong-term investments increased by a net $248 during the quarter.
          Financing activities
              Start(7586) – of bank operating Loans
             Net repaymentsend (7338) = 248 (net disposal proceeds went down)
                                                                     (4,653)
             Stock options an Asset.                                     27
         Long term inv is exercised (LHS). They went down. So Cash must go up to
                                             counteract
             Principal repayments on long-term obligations           (2,430)
          Net cash provided by financing activities                  (7,056)
          NET CASH FLOW AND CASH BALANCE, END OF PERIOD               1,970



5 - 29                                                       Financial Accounting, Second Canadian Edition
                              SLEEMAN BREWERIES LTD.
                     Conslidated Statement of Cash Flows - Unaudited
                                As at September 27, 2003

                                                               3 Months Ended
         (All amounts in 000s)                              September 27, 2003

   Net cash provided by (used in) operating activities  $ 10,128
   Investing Activities
      Additions to property, plant, and equipment         (1,350)
      Proceeds from long-term investments
  $4,653 was repaid against a line of credit during the      248
   Net cash used in investing activities                  (1,102)
 period. Ending balance was 0. Is this a plus or minus
   Financing activities
                                  to the cash?
      Net repayments of bank operating Loans              (4,653)
      Stock options exercised                                 27
                        Intuitively, obligations
      Principal repayments on long-termit’s an outflow.   (2,430)
   Net cash provided by financing activities              (7,056)
          loan is AND CASH BALANCE, END OF PERIOD
 BankCASH FLOW a liability. (goes down by 4,653) with SE
   NET                                                     1,970
                 staying the same => decrease in cash.
5 - 30                                                       Financial Accounting, Second Canadian Edition
                              SLEEMAN BREWERIES LTD.
                     Conslidated Statement of Cash Flows - Unaudited
                                As at September 27, 2003

                                                               3 Months Ended
         (All amounts in 000s)                              September 27, 2003

  Net cash provided by (used in) operating activities $ 10,128
  Investing Activities
     Additions to property, plant, and equipment        (1,350)
     Proceeds from long-term investments                   248
  Net cash used reconcile the
Now we canin investing activities change in cash to the ending
                                                        (1,102)
cash balance that appears on the Balance Sheet. (page
  Financing activities
     Net                                                (4,653)
243 of repayments of bank operating Loans also be the last number
                      The 1,970 should
          text). exercised
     Stock options                                          27
                    of the statement of cash flows.(2,430)
     Principal repayments on long-term obligations
  Net cash provided by financing activities             (7,056)
  NET CASH FLOW AND CASH BALANCE, END OF PERIOD          1,970



5 - 31                                                       Financial Accounting, Second Canadian Edition
         A Comparison of the Direct and
              Indirect Methods

  • Net cash flow is the same for both methods. Same
    result, different details.
  • The direct method provides more detail about cash
    from operating activities, where its coming from,
    and going to. Instead of change in accounts, it
    shows gross amounts payed out and brought in.
  • The investing and financing sections are identical
    for the two methods.




5 - 32                              Financial Accounting, Second Canadian Edition
                      Exercise 5-9 in text
   •     Compute cash from using indirect method (only operating section)
   •     1) label all the items with section, and in/out flow

   Net loss                                                         (8,782)
       Depreciation (Amortization)                                  32,915
       Accounts Recievable up -> cash down                          (170)
       Decrease in inventory                                        643
       Increase in PPD exp                                                        (664)
       Decrease in A/P                                              (2282)
       Decrease in Accliab                                                        (719)
       Income Taxes Payable                                         1861

   NET effect (inflow from operating activities)                    22,802

   Note: we omitted the bottom two items. They don’t count, as they are in Financing and
      Investment sections

   What do we see? Net loss on accruel basis, but in Cash, we see an in flow. Therefore in
      previous years we know they bought a lot of equipment (spent a lot of cash) and their
      assets are depreciating. That is good, but will it continue? Looking at that, it will
      continue so long as they have not fully depreciated their assets. We want positive
      cash flows form operations in the long run for it to survive.


5 - 33                                                        Financial Accounting, Second Canadian Edition
                    Exercise 5-13 in text
   •   Investing and financing sections of the statement of cash flows
   Investing
       purchase of PPE                                              (1,077)
       purchase of mineral property                                               (17,815)
       purchase of shares of company                                              (65)
       sale of short term investments                                             14

         SUBTOTAL       cash outflow                                              (18,943)

   Financing
       proceeds for issuance of shares                                            4,649
       proceeds from bank loans                                     10,043

         NET CASH FLOWS FROM FINANCING ACTIVITIES                                 14,692

   This snippet tells us that the company is growing, buying equipment and property to
       produce more, paying for it by getting more investors and bank loans




5 - 34                                                        Financial Accounting, Second Canadian Edition

								
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