Chapter 11 Skeleton Notes

These flashcards cover key concepts and terms related to cash flow activities and the preparation of the statement of cash flows.

Operating activities

Include cash inflows from core business operations.

Investing activities

Involve cash flows from the acquisition or sale of long-term assets.

Financing activities

Include cash flows from borrowing and repaying debts or issuing stock.

Indirect method

Starts with net income and adjusts for non-cash items.

Direct method

Reports cash inflows and outflows directly.

Net cash flows from operating activities

Calculated starting with net income and adjusted for changes in current assets and liabilities.

Depreciation expense

A non-cash expense that is added back to net income.

Loss on sale of land

An expense that is added back during the cash flow adjustment.

Accounts receivable increase

Results in a decrease in cash flow.

Cash return on assets

A financial ratio that measures the cash generated per dollar of assets.

Cash flow to sales

A ratio that measures cash flow generated from sales.

Asset turnover

Measures the efficiency of a company's use of its assets in generating sales.