Expert Solution
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Step 1
Cash Flow Statement
Cash flow statement which has three important segment are there. These segment are given below
Cash flow from operating activities
Cash flow from Investment Activities
Cash flow from Financing Activities
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Step 2
Net Cash flow from Operations and Net Income has some difference in their nature as well. Net income which was derived in the business entity from the total sales and other revenue and deduct the cost of goods sold and other operating expenses which has cash and non cash expenses like depreciation, gain on sale of assets or loss on sale of assets and taxes to get the net income of the business as well. For the Net income which includes both cash and non cash items which are incurred into the business as well. Where as in the Cash flow from Operating activities which are deal with only cash movement items and include the net income and added or deducted non cash items which are incurred to form the net income of the business as well. Net cash flow from operation which are higher in the business entity which is ultimately deemed that firm has more working capital liquidity which can be meet up the current debt obligation of the business as well,.
In the Net Cash flow from Operating activities which are not only include the details of net income and adjust the non cash items (either it is add or deduct) also incurred the detailed examination of the working capital movement of the business like Cash Received form the Customer, Cash payment paid to the Supplier, Cash Paid to the employees, Interest cost which are paid through cash, taxes paid in the way of cash through and determine the movement analysis of the net cash flow which are incurred to this as well. While preparing the Net cash flow from operating activities which are not only analyze the details of the profitability of the business but also deals with the movement of working capital which are involved with the business as well.
Detailed analysis of the working flow of the business entity which is incurred while preparing the net cash flow from the operation which are handled the details of the payment and receipts of the receivables and payables and other payments like salaries and other expenses to the employees and also incurred other financial cost which are incurred to the business and ultimately check the balance of the working capital requirement which are incurred to the business as well. |
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