Analysis of Operating Activities| Lecture 20 | FSA | Syeda Arooj Naz

Analysis of Operating Activities , Syeda Arooj Naz , LECTURE #20 , # , Syeda Arooj Naz , Analyzing Cash flow from Operating Activities , Analysis of Operating Activities ,Lecture 20 , FSA , Syeda Arooj Naz Cash flow from operations is the section of a company’s cash flow statement that represents the amount of cash a company generates (or consumes) from carrying out its operating activities over a period of time. Operating activities include generating revenue, paying expenses, and funding working capital. It is calculated by taking a company’s: Direct method (1)Net sales (2)All expenses/Costs/payments Indirect method (1) Net income (2) adjusting for non-cash items (3) accounting for changes in working capital. # List of Items included in Cash Flow from Operating Activities Using direct method , common items included in cash flow from Operating activities are as follows: Net Cash receipts from sales (cash inflows) Cash payments to suppliers (Direct cost/COGS) (cash outflow) Selling, administration, R&D expenses (Indirect costs/ operating costs)(cash outflow) Interest expense paid in cash(cash outflow) Tax paid in cash (cash outflow) # List of Items included in Cash Flow from Operating Activities Using Indirect method , common items included in cash flow from Operating activities are as follows: Net Income or Income before interest and taxes Profit on Sale of asset (cash outflow) Loss on Sale of asset (cash Inflow) Non Cash Expenses (depreciation, amortization, goodwill) (cash Inflow) Non Cash Revenues (Cash outflow) Changes in Working Capital Increase in assets (Cash outflow) decrease in assets (Cash inflow) Increase in liabilities (Cash inflow) decrease in liabilities (Cash outflow) # # # Any Questions and Queries?