Chapter 43: Cashflow statement

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15 Terms

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Reporting period

the specific time frame a company uses to report its financial performance, such as income, expenses, and profit.

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Depreciation

Represents reductions in the values of the firm’s equipment (although no actual cash leaves the company)

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Cashflow statement

Shows cash inflows and outflows, money that actually comes in and goes out of a company in a particular period

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Cash inflows

Money coming into a company, usually from activities like sales, investments or loans.

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Cash outflows

Money going out of a company, such as payments for expenses, salaries, rent, buying equipment …

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Cashflow problems

Problems that occur when a company doesn’t have enough cash to cover its expenses, even if it’s profitable. Causes

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Credit terms

Conditions under which a seller extends credit to a buyer, like payment period, discounts for early payment. It also answers the question

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Credit period

Amount of time a buyer has to pay for goods or services purchased on credit.

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Net cashflow from operations

Money generated by the sales of the company’s goods or services minus money spent on supplies, staff salaries … in the period

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Generated

Produced or created

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Net cashflow from investment activities*

Inflows

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Net cashflow from financing activities*

Inflows

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Net cash position

Adding and subtracting the figures above*, the company calculates its Net cash position at the end of the year. In short, Net cash position refers to the amount of cash a company has after subtracting its debt.