Читать книгу Entrepreneurial Finance - Robert D. Hisrich - Страница 43

The statement of cash flow describes the venture's cash flow. It analyzes cash flow, calculating cash flow attributed to three different activities: operations, investment activities, and financing activities. Questions include how much cash the company spent or where the cash came from. A simplified cash flow statement is shown in Table 3.5.

Table 3.5

Cash flow from operations is defined as the cash generated or used by virtue of the day-to-day operations of the venture. Collected accounts receivable and cash from cash sales represent positive cash flow. Paid expenses related to generating those sales represent outflows of cash. The sum of these two flows is referred to as cash flow from operations, and this normally represents the bulk of the cash inflows and outflows that pass through the company.

Cash flow from investments includes cash generated or consumed by the purchase or sale of buildings, equipment, and marketable securities (stocks or bonds). It may also include loans advanced to suppliers or customers as well as payments related to acquisitions of parts of another venture.

Cash flow from financing activities includes cash generated or consumed by investments, investors, loans from banks, dividend payments, stock repurchases, and repayment of debt principal.

The firm's net cash flow is the cumulative sum of the above three subclasses of cash sources and uses. In short, the net cash flow equals cash sources minus cash uses. This computation is used to describe how the venture generates cash to fund operations, pay off liabilities, or pay dividends to investors. By analyzing the cash flow of a venture, it is possible to make conclusions about management's capabilities and the firm's overall efficiency. For example, if external financing from investors is the main source of cash for a large period of time, without significant inflows from operations, it is an alert that the firm could face upcoming financial challenges or is already experiencing difficulty in making and selling its product.