Chapter 7 Fund Analysis. cash Flow Analysis, and Financial Planning 7-1
7-1 Chapter 7 Fund Analysis, CashFlow Analysis, and Financial Planning
Fund Analysis, Cash-Flow Analysis, and Financial Planning n Flow of Funds(Sources and Uses Statement o Accounting Statement of Cash-Flows n Cash-Flow Forecasting o Range of Cash-Flow Estimates n Forecasting Financial Statements 7-2
7-2 Fund Analysis, Cash-Flow Analysis, and Financial Planning Flow of Funds (Sources and Uses) Statement Accounting Statement of Cash-Flows Cash-Flow Forecasting Range of Cash-Flow Estimates Forecasting Financial Statements
Flow of Funds statement A summary of a firm's changes in financial position from one period to another: it is also called a sources and uses of funds statement or a statement of changes in financial position Has been replaced by the cash flow statement(1989 ) in U.S. audited annual reports. 7-3
7-3 Flow of Funds Statement Has been replaced by the cash flow statement (1989) in U.S. audited annual reports. A summary of a firm’s changes in financial position from one period to another; it is also called a sources and uses of funds statement or a statement of changes in financial position
Why Examine the Flow of Funds statement QUESTION? Why should we bother to understand a flow of funds Statement that is no longer required to appear in U.s. audited annual reports? 7-4
7-4 Why Examine the Flow of Funds Statement QUESTION? Why should we bother to understand a Flow of Funds Statement that is no longer required to appear in U.S. audited annual reports?
Why Examine the Flow of Funds statement The flow of Funds statement n Includes important noncash transactions while the cash flow statement does not n Is easy to prepare and often preferred by managers for analysis purposes over the more complex cash flow statement n Helps you to better understand the cash flow statement, especially if it is prepared under the Indirect method 7-5
7-5 Why Examine the Flow of Funds Statement Includes important noncash transactions while the cash flow statement does not. Is easy to prepare and often preferred by managers for analysis purposes over the more complex cash flow statement Helps you to better understand the cash flow statement, especially if it is prepared under the Indirect method. The Flow of Funds Statement: