13 Statement of Cash Flows

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4 Terms

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Corporate life cycle

The four phases in the life of a business - introductory, growth, maturity, and decline, each with changing cash flows.

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Direct method

A way to find net cash from operating activities on the cash flow statement by adjusting income statement items from accrual to cash basis.

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Free cash flow

A cash-based metric for solvency, calculated by subtracting net capital expenditures and cash dividends from net cash from operating activities.

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Indirect method

A method to determine net cash from operating activities on the cash flow statement by adjusting net income for non-cash affecting items.