[larzetme]

HI Guys!!! can someone please briefly explain the subject of cash flows to me… Do you always subtract cash outflows??? if not what are the scenarios when you not, and why.. if yes.. i would go by understanding that if you subtract cash thats means cash outflow..

thanks!!

[Spartans92]

Cash flow is broken down into 3 categories. You have operating, financing, and investing activities. Each section can be a cash inflow or outflow. Hence, “cash provided by operating or cash used by operating.” Saying cash outflow/inflow alone is very broad because it could be from either activities. First, I would say understand what activities represent which category. For instance, paying employees would be outflow under operating. Then you have issuing stocks or repurchasing shares which are financing (inflow and outflow). Hope that helps.

BEC- PASS

[leglock]

Cash flow is just reconciling your cash activity during the period. You start with net income which includes a host of non cash activity since you are probably using accrual basis. Depreciation expense is something you to deduct to get to net income, however, this expense does not involve cash, so you must add it back.

[Author]

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