FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» McDonald’s අපේ නෙමෙයි අපේ බෝස්ගේ – අබාන්ස් කියයි
by ChooBoy Today at 10:19 am

» AI Assistance for Stock Market Research and Analysis
by ChatGPT Today at 7:12 am

» Comparative Analysis of the Insurance Sector
by God Father Tue Mar 26, 2024 11:46 pm

» Sri Lanka: Why Pay Exorbitant Taxes?
by ChatGPT Tue Mar 26, 2024 10:52 pm

» LANKA CREDIT AND BUSINESS FINANCE PLC (LCBF.N0000)
by K.R Tue Mar 26, 2024 3:15 pm

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by D.G.Dayaratne Tue Mar 26, 2024 9:11 am

» SIYAPATHA FINANACE PLC (SLFL.N0000)
by ChatGPT Tue Mar 26, 2024 7:58 am

» FINANCE AND LEASING SECTOR
by ChatGPT Mon Mar 25, 2024 6:45 am

» LOLC FINANCE PLC (LOFC.N0000)
by ChatGPT Mon Mar 25, 2024 6:36 am

» CIC HOLDINGS PLC (CIC.N0000)
by ChatGPT Mon Mar 25, 2024 6:18 am

» UNION ASSURANCE PLC (UAL.N0000)
by ChatGPT Mon Mar 25, 2024 6:15 am

» First Capital Holdings PLC: Current Financial performance and future outlook
by God Father Sun Mar 24, 2024 10:58 pm

» LankaBizz: Sri Lanka's First ever Artificially Intelligent (AI) Business and Research Assistant
by God Father Sun Mar 24, 2024 7:27 am

» HOTEL AND TRAVEL SECTOR
by ErangaDS Wed Mar 20, 2024 7:22 am

» CIC Holdings Good Times Ahead
by ashan silva Mon Mar 18, 2024 11:00 am

» EPF Fund keep eye on low P/E Shares
by K.R Mon Mar 18, 2024 8:45 am

» SINS - the Tailwind effects of a crisis hit Economy
by Hawk Eye Mon Mar 18, 2024 8:37 am

» Ceylon cold stores
by Hawk Eye Mon Mar 18, 2024 8:25 am

» Asha securities Provide buy signal for CIC
by ddrperera Fri Mar 15, 2024 1:10 am

» CSE ready for another Downtrend?
by D.G.Dayaratne Thu Mar 14, 2024 11:24 am

» LankaLAW Forum : Sri Lanka’s #1 Discussion Platform for Legal Questions and Answers
by blindhog Thu Mar 14, 2024 9:14 am

» Sri Lanka poised to benefit from demand surge for ‘non-China origin’ graphite
by samaritan Wed Mar 13, 2024 1:31 pm

» LOLC hotels
by Maharaja Tue Mar 12, 2024 2:34 pm

» AEL target price ?
by suku502 Mon Mar 11, 2024 11:26 am

» WAPO 200% UP
by LAMDA Sun Mar 10, 2024 10:33 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube

Disclaimer
FINANCIAL CHRONICLE™ Disclaimer

The information contained in this FINANCIAL CHRONICLE™ have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein. FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever. Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, FINANCIAL CHRONICLE™ blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

Further the writers and users shall not induce or attempt to induce another person to trade in securities using this platform (a) by making or publishing any statement or by making any forecast that he knows to be misleading, false or deceptive; (b) by any dishonest concealment of material facts; (c) by the reckless making or publishing, dishonestly or otherwise of any statement or forecast that is misleading, false or deceptive; or (d) by recording or storing in, or by means of, any mechanical, electronic or other device, information that he knows to be false or misleading in a material particular. Any action writers and users take in respect of (a),(b),(c) and (d) above shall be their own responsibility, FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental violation of securities laws of any country, damages or loss arising out of the use of this information.


AI Live Chat

You are not connected. Please login or register

Analysis of Cash Flow Statement

+2
Slstock
rijayasooriya
6 posters

Go down  Message [Page 1 of 1]

1Analysis of Cash Flow Statement Empty Analysis of Cash Flow Statement Sat Aug 27, 2011 5:59 pm

rijayasooriya

rijayasooriya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

What is CFS?

CFS details the inflow and outflow of cash over a period of time.



What is the importance of CFS over income statement?

Unlike IS, CFS does not include non cash accounting entries such as depreciation.

While accountants use different methods to report income and expenses mainly accrual basis a CFS does not allow any variations in reporting cash balances. Many items that require the use of cash do not appear on an IS.

Ex:-Loan repayments do not appear on IS. So bussiness can show profit and still may have negative cash fiow.



What are the sections of CFS?

1.Operating activities

2.Investing activities

3.Financing activities



How to evaluate the CFS?

1.Operating segment:-

OS tells how much cash the company makes from its products or services - its core bussiness.(Is it making money by doing what it is doing?). This tells whether a company is profitable or not at a glance.

2.Investing segment:-

IS tells how much cash the company makes from investments in its future growth. It shows how much money the company is dedicating to internal investments and improvement and where specifically that money is going.Long term fixed assets will be represented here - building,land,equipment.

3.Financial segment:-

FS details the company's issuing of stocks or bonds.When a company issues stocks the amount of money it makes from this process is entered in this segment. When it buys stocks back that cost shows up as a negative number since the company spends money to do it.



What is the most important number in CFS?

Cash and Cash equivalents number.Appear at the end of statement.Also appear in balance sheet.



Last but not Least

Positive cash flow is the lifeblood of the company.And it is very plus mark for company.But sometimes a company may have negative cash flow because it is investing in new equipment due to rising sales. In long run this is good for the company.So always look what is the reason for negative or positive cash flow.





(Based on articles from www.ehow.com)

2Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Sun Aug 28, 2011 2:28 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

rijayasooriya wrote:What is CFS?

CFS details the inflow and outflow of cash over a period of time.



What is the importance of CFS over income statement?

Unlike IS, CFS does not include non cash accounting entries such as depreciation.

While accountants use different methods to report income and expenses mainly accrual basis a CFS does not allow any variations in reporting cash balances. Many items that require the use of cash do not appear on an IS.

Ex:-Loan repayments do not appear on IS. So bussiness can show profit and still may have negative cash fiow.



What are the sections of CFS?

1.Operating activities

2.Investing activities

3.Financing activities



How to evaluate the CFS?

1.Operating segment:-

OS tells how much cash the company makes from its products or services - its core bussiness.(Is it making money by doing what it is doing?). This tells whether a company is profitable or not at a glance.

2.Investing segment:-

IS tells how much cash the company makes from investments in its future growth. It shows how much money the company is dedicating to internal investments and improvement and where specifically that money is going.Long term fixed assets will be represented here - building,land,equipment.

3.Financial segment:-

FS details the company's issuing of stocks or bonds.When a company issues stocks the amount of money it makes from this process is entered in this segment. When it buys stocks back that cost shows up as a negative number since the company spends money to do it.



What is the most important number in CFS?

Cash and Cash equivalents number.Appear at the end of statement.Also appear in balance sheet.



Last but not Least

Positive cash flow is the lifeblood of the company.And it is very plus mark for company.But sometimes a company may have negative cash flow because it is investing in new equipment due to rising sales. In long run this is good for the company.So always look what is the reason for negative or positive cash flow.





(Based on articles from www.ehow.com)
Very good and informative.

Pl note : I moved the topic to stock market help as it is more appropriate there

3Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Sun Aug 28, 2011 10:10 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Something good for new comers.. Thanks.. Wink

4Analysis of Cash Flow Statement Empty What Is Cash Flow? Wed Apr 25, 2012 4:17 am

sriranga

sriranga
Co-Admin

How to measure a company's life blood.
The cash flowing in and out of a company is a great indicator of its health. Companies need liquidity to be able to pay their bills and keep their bankers at bay.

But there's a confusing panoply of metrics: cash from operations, free cash flow, cash profits. If cash flow is the life blood of a business, how do you measure a company's blood pressure?

Cash flow statement
The starting point is the cash flow statement. International Accounting Standards require a business to split its cash flows into three categories: those associated with its operations, investing activities and financing activities.

Most commonly, you'll see this in a company's accounts looking something like this (which I've simplified by stripping out and combining lines):

Analysis of Cash Flow Statement Cash110


The three categories of operations, investing and financing are clearly separated, and at the bottom there is a reconciliation of the cash flows to opening and closing cash balances.

Alice in Wonderland
The first thing to note is the Alice in Wonderland-like distinction between 'cash generated from operations' and 'net cash generated from operating activities'. "When I use a word, it means just what I choose it to mean," as Humpty Dumpty said in the book.

Cash generated from operations is operating profit with depreciation added back, adjusted for changes in working capital. It is usually reconciled to profit in a note, making it one of the most important notes to look at in a company's accounts. It looks something like this:

Analysis of Cash Flow Statement Cash210

Cash generated from operations indicates how much cash a company is making from its basic activities. Depreciation is added back because it's just an accounting entry. Profits with depreciation added back are sometimes called cash profits. Start-up companies that have invested heavily may make cash profits while they are still loss-making, because of high levels of depreciation.

Increases in inventory or receivables are also deducted in calculating cash generated from operations, because these absorb cash. A growing company might be increasing sales, but spending all its cash building up stock.

Interest
Most companies regard interest and tax as integral to their operations, so put them in the first segment of the cash flow. That produces net cash generated from operating activities. It's a mouthful, but a useful subtotal. Not all do: Rolls Royce (LSE: RR), for example, puts interest into the financing category. It also puts the reconciliation of cash to profit on the face of the cash flow statement, so at first sight it looks a very different statement.

Cash conversion refers to how efficiently a company is turning profits into cash. I prefer to measure it by comparing net cash generated from operating activities with operating profit. Remember operating profit has depreciation taken off, so the cash flow figure may be greater. If the ratio is much different from one, it's reason to look more closely.

Investing
The next section of the cash flow statement is more straightforward. Typically, companies invest cash in capital expenditure and acquiring new businesses. If the figures are large, you need to look at how they have been financed: from operations, or from new financing?

Some capital expenditure is necessary just to maintain a company's current activities, rather than to expand. That's usually called maintenance capex. It's an important concept as, long term, a company should generate enough cash from its operations to cover maintenance capex, otherwise it's running its plant into the ground.

The accounting standard encourages, but doesn't require, a company to disclose how much of its capex is maintenance capex. Usually, you can get a decent idea from the narrative in the accounts.
It's a useful number to estimate, and allows you to calculate a figure for an important concept: free cash flow. For our purposes, that's generally defined as net cash flow from operating activities less maintenance capex.

Free cash flow measures the cash that a firm is producing for its shareholders. For that reason it's often used a valuation metric, by calculating price to free cash flow (i.e. market cap divided by free cash flow). But beware, there is a multitude of variants for calculating free cash flow (including those used in discounted cash flow analysis which deduct tax-shielded interest charges).

Financing
The final, financing, segment of the cash flow statement would be clear cut, but for the inclusion of dividends. For most listed companies, dividends are not a discretionary expenditure, at least not without the share price collapsing. So it often makes sense to treat dividends as a fixed charge, like interest and tax.

Probably the easiest way to capture this is to compare net cash generated from operating activities to the dividend, a form of cash dividend cover. If the dividend is not covered, then it is being financed by property sales, lenders, or the shareholders themselves.

In summary
To recap, three useful measures are:
Cash conversion: net cash generated from operating activities ÷operating profit.

Price: free cash flow, where free cash flow = net cash generated from operating activities – maintenance capex.

Cash dividend cover = net cash generated from operating activities ÷ dividends paid.

BY Tony Reading
Published in Investing on 24 April 2012
http://www.fool.co.uk/news/investing/2012/04/24/what-is-cash-flow.aspx

http://sharemarket-srilanka.blogspot.co.uk/

5Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Wed Apr 25, 2012 7:31 am

K.Haputantri

K.Haputantri
Co-Admin

Thank you Shri for sharing.

6Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Wed Apr 25, 2012 1:39 pm

sriranga

sriranga
Co-Admin

K.Haputantri wrote:Thank you Shri for sharing.

rijayasooriya wrote:Thanks sri.....

http://forum.srilankaequity.com/t9057-analysis-of-cash-flow-statement?highlight=cash+flow+statement

Thanks for the feed back.
@ Rijaya
I just shared an article from Fool.co.uk, I also read your article in the past.
Good one. Just to refresh our members I shared this one.
If you do not mind, could you please merge this post with your post?

http://sharemarket-srilanka.blogspot.co.uk/

7Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Wed Apr 25, 2012 8:11 pm

rijayasooriya

rijayasooriya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

sriranga wrote:
K.Haputantri wrote:Thank you Shri for sharing.

rijayasooriya wrote:Thanks sri.....

http://forum.srilankaequity.com/t9057-analysis-of-cash-flow-statement?highlight=cash+flow+statement

Thanks for the feed back.
@ Rijaya
I just shared an article from Fool.co.uk, I also read your article in the past.
Good one. Just to refresh our members I shared this one.
If you do not mind, could you please merge this post with your post?

It is good that u have posted this article it is more informative. We may keep both articles in this way.....If u want to merge I will merge.

8Analysis of Cash Flow Statement Empty Re: Analysis of Cash Flow Statement Fri Apr 27, 2012 2:49 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics

Good work and very helpful.
Big thanks to Rijaya and Sriranga.

Sponsored content



Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum