Consolidated Cash Flow Statements

Question 1

What are the three sections of a cash flow statements

Answer 1

Operating - Ability to generate fresh cash
Investing - Reinvestment of profits
Financing - New cash

Question 2

Where to start with operating cash flow

Answer 2

Profit before tax

Question 3

Which goes into the working capital part of the operating cash flow

Answer 3

Receivables, payables and inventories

Question 4

What are the advantages / disadvantages of a consolidated cash flow statement

Answer 4

Advantages
Verifying Profitability and Liquidity Positions.
Verifying Capital Cash Balance.
Cash Management
Ability of management to manipulate diminished

Disadvantages
Difficult to understand strong and weak companies, don’t all enjoy the same liquidity
No understanding of long term performance strategy or non-financial benefits
Cash spending can be delayed.
Growing companies can be penalized by an analysis of the cash flow statement