cash flow statement analysis nothing, problems, understand

spartan1

is cash flow statement analysis as hard/confusing as i think it is?


So far i've got through Ethics, Quant, Econ and the first 5 readings or so of FRA and i came upon this chapter n it seemed to be so confusing. First reading i've walked away from n felt as if i just retained nothing because it seemed so confusing. Did anyone else notice this to be a reading where they really needed to just do problems to fully understand it? I'm specifically talking about the whole "uses" "sources" plusses/minus rulesa nd the general indirect/direct cash flow from operations part. Dunno if I wasn't focused or something but felt most of this reading just went right over my head.

Analyze_This

I'm not sure about your specifics, but I'd say cash flow statements can be tricky. Just do problems and learn from your mistakes and ask questions. That's how I learn most of my material. (I even learn from my mistakes on easy material)

wizofoz

i would say the key to understanding cash flows is first understanding that net income is different from the cash that a business actaully recieves.

Various account can either increase or decrease your cash holdings.... just try and take it on a case by case basis

WarrenB1

In exam it is unlikely to be asked to make cash flow statement by direct or indirect method. Just remember the flow of direct and indirect method. Practise well on calculating cash collected from customers or cash paid to suppliers. Curriculum has explained well the methodology to calculate cash.

Make a table of accounting treatements of cash flows from both USGAAP and IFRS. Like in USGAAP apart from dividends paid, other things, come under operating activities. Dividends paid come under financing activities.

Sometimes the ratios are also tested which are given in the 2nd last LOS of the chapter also memorize those 1,2 questions are likely to be tested from there.

Read the chapter in chunks it would be easy for you to retain it then.

Swanand

Net income (accrual accounting)
+/- changes in accruals
+/- non-IS cash items
---------------------
Cash flow



Edited 1 time(s). Last edit at Thursday, August 18, 2011 at 09:40AM by Canadian_Accountant.

giorgio10

thanks guys... i did some problems last night and then read it over a bit and it was a lot clearer sort of clicked, not as difficult as i thought

jarobi04

I'm on my 2nd pass of all the readings and EOC questions. Although I don't remember much of the FRA readings and questions, my recent EOC results are much better than my first pass. I guess your subconscious clings to the material better than what you might think.