Analysis of Cash Flow Statement Essay

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Analysis of Cash Flows Statements By Song Hanxiao
Pace University – New York Campus
MBA 640, 72052
Fall 2011
John Paul
Required Research Paper

Contents Abstract --------------------------------------------------------------------------------------------------------3 | I. Introduction of importance of Cash Flows statements -------------------------------------4 | II. Function of Cash Flow Statements -----------------------------------------------------------5 | III. Analysis of Cash Flow Statement ------------------------------------------------------------7 | 1. Analysis of Repayment Ability ----------------------------------------------------------7 | 2.
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For example, if one the following is one company’s cash flow statement: revenue of 4.8 million from current period sales and providing labor, bonus of 0.75 million for employees, purchasing fixed assets in current period for 0.95 million, and payment of 0.18 million for banking interest. As the same, cash inflows and outflows from other operating activities can be allocated into cash flow statement. Therefore, cash flow statement can reveal the reason of cash inflows and outflow, to say in another way, cash comes from where and go to where, which information balance sheet and income statement cannot provide. 2. Helpful to evaluate the corporation’s overall financial situation objectively
One purpose of making financial statements by managements is to reflect company’s operation and financial situations, which can provide benefit information for decision making level. Another aspects is creditors and investors seek to better investment decision after they analyze financial statements. Therefore, it is very important to management level, creditors and investors through evaluating corporation’s financial status objectively. And we can analyze through three parts, which is operation activities, investing activities and financial
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