Ch 14: Statement of Cash Flows

free cash flow

The amount of operating cash flow remaining after replacing current productive capacity and maintaining current dividends.

statement of cash flows

A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

direct method

A method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments.

indirect method

A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.

cash flow per share

Normally computed as cash flow from operations per share.

cash flows from investing activities

The section of the statement of cash flows that reports cash flows from transactions affecting investments in noncurrent assets

cash flows from operating activites

The section of the statement of cash flows that reports cash flows from transactions affecting the determination of net income.

cash flows from financing activities

The section of the statement of cash flows that reports cash flows from transactions affecting the equity and debt of the business.