STATEMENTS OF CASH FLOWS

DEFINITION STATEMENTS OF CASH FLOWS

          Cash flow statement is a financial statement containing information cash inflows and cash flow of a company during a specific period. The presentation of information is classified according to the type of activities that result in cash inflows and the cash out. Corporate activities generally consist of three types, namely, operational activities, investment activities and financial activities.

          Operational activities for a merchandising business consists of buying merchandise, selling the merchandise as well as other activities related to the purchase and sale of goods. For service companies, among other operations are selling a service to its customers. Suppose sells aeronautical services and non aaeronautika. This activity will result in money coming in for revenue and cash flow out to cost. Both revenues and expenses have been reported in the income statement, but the amount of revenue is not necessarily the same as money received because companies generally use the accrual basis for recognizing revenue. So it is with costs, the costs reported income is not necessarily the same as the outflow for the cost.

          Investment activity is an activity to buy or sell an investment return on long-term securities and fixed assets. If the company buys investments / fixed assets will result in an outflow and if you sell an investment / assets will result in a cash inflow to the company.
Financial activities or financing activities some call it, is the activity of attracting money and long-term creditors of the owner as well as refund money to them.

SHAPE / PRESENTATION METHOD STATEMENTS OF CASH FLOWS

          There are two forms of presentation of cash flows, the first and the second direct method indirect method. The difference between the two methods lies in the presentation of cash flows from operating activities. Under the direct method, cash flows from operating activities broken down into cash inflows and cash outflows. Cash flow in and out further detailed in several types of receipts or disbursements. While the indirect method, the cash flow from operational determined by correcting the reported net income in the income statement with a few things such as depreciation expense, an increase of current assets and current liabilities and profit / loss on disposal of investments

READ THE STATEMENT OF CASH FLOWS

          Initially many users of financial statements to devote more attention to the Profit and Loss and Balance Sheet reports. Income statement describing the Company's operating results for a particular period. While the balance of the financial position at a given time.

          Lately realized how to manage the cash that the company also needs to be evaluated by evaluating the cash flow statement.
Before looking at how the company managed its cash, we need to realize that in order to properly read financial statements to understand how the presentation of cash flow information. In the direct method, cash flows from operations are detailed sources and as well as spending cash so it will be easy to understand report appropriately.

          In the indirect method, the cash flow statement of operations begins with net income, and net income is corrected with certain item-item treated differently between the preparation of the income statement (which generate net income) and cash flow statements. In preparing the company's income statement using the accrual basis, so maybe in a given year there are costs that have been treated as an expense (expense), but in that year there is no cash outlay. These are the things that on net income will change to net cashflows from operations. Thus if the cost of amortization and depreciation is added, do not mean that the physical depreciation and amortization will result in a cash flow of it.

          There are several possible cash flow patterns that occur within the company, namely:

          All activities (operational, and financial investasim) generate positive cash flow means cash receipts of each of these activities is greater than the cash outlay. In the first state of all activities generate cash receipts greater than disbursements. Of course in the long run there will be a large cash balance.

          All activities (operational, investment and finance) generate negative cash flow means cash receipts of each of these activities is smaller than spending cash. This is the opposite pattern 1 above, so that in the long term existing cash reserves will be exhausted.

          Operations while the positive and negative financial investment activities. In the third pattern, the company used cash from operations to pay the debt / capital return / pay dividends and to invest. This pattern can be said to be ideal, and many observers say this is the greatest opponents of the state treasury.

          Operations and investment activities positive but negative financial events. While the pattern of investment sales and operational results are used to pay debt capital returns.

          Operations while the negative and positive financial investment activities. This means that companies use most of the investment and withdrawal of loan capital to finance the operations. This activity should not be allowed to drag on.

          Investment activity is negative while the positive financial and operational activities. The company uses cash from operations and borrowings / equity withdrawal to invest.

          Operational activities and financial activities while the negative investment positive. Company's operational activities and investments are partly financed with a loan or withdrawal of capital. Some of the funds are also used for operations. This condition may occur in a growing company.

          Investment activity is positive but negative financial and operational activities. Company may sell investments / fixed assets to meet operational needs and debt repayments / payments to owners.

          In observance of the cash flow pattern over the participant will be able to know the meaning of information on a company's cash flow reported in the statement of cash flows in order to evaluate the cash management of the company.