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  • Afm010 Topic06 Lecture02

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    There are three categories of cash flows: operating activities, investing activities, and financing activities. Operating activities involve cash from daily business operations and outflows to pay expenses. Investing activities include cash spent to acquire long-term assets and cash received from selling assets. Financing activities consist of cash from issuing shares and loans and cash spent on repaying loans and buying back shares. Understanding these three types of cash flows provides insight into a company's liquidity and cash generation.

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    There are three categories of cash flows: operating activities, investing activities, and financing activities. Operating activities involve cash from daily business operations and outflows to pay expenses. Investing activities include cash spent to acquire long-term assets and cash received from selling assets. Financing activities consist of cash from issuing shares and loans and cash spent on repaying loans and buying back shares. Understanding these three types of cash flows provides insight into a company's liquidity and cash generation.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    4 views13 pages

    Afm010 Topic06 Lecture02

    Uploaded by

    sornsreynich9
    There are three categories of cash flows: operating activities, investing activities, and financing activities. Operating activities involve cash from daily business operations and outflows to pay expenses. Investing activities include cash spent to acquire long-term assets and cash received from selling assets. Financing activities consist of cash from issuing shares and loans and cash spent on repaying loans and buying back shares. Understanding these three types of cash flows provides insight into a company's liquidity and cash generation.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 13

    Overview of the

    three activities
    There are three activities
    we can categorise cash
    flows into…
    From simple to more meaningful…
    Operating
    activities
    Cash flows in
    -
    Cash flows out + or −
    Net cash flow
    = +
    Net cash flows Investing activities Opening balance
    =
    +
    Closing balance
    Opening balance + or −
    =
    Closing balance Financing
    activities
    Three categorised activities
    Operating cash flows

    Often shown as a
    Investing cash flows ‘Net increase/
    (decrease) in cash
    and cash
    equivalents’
    Financing cash flows
    Or a ‘Net change in
    cash and cash
    equivalents’.

    Net cash flows


    Opening balance
    Closing balance
    Cash flows from
    operating activities

    •Cash from everyday operations,


    ensuring there is enough cash
    to pay for interest, tax and
    dividends.
    Cash flows from
    investing activities

    •Cash spent on infrastructure,


    creating capacity: land, buildings,
    vehicles, equipment; includes cash
    from sales of such assets.
    •Cash from financial investments.
    Cash flows from
    financing activities

    •Cash obtained from issue of


    shares and loans + repayment
    of loans; cash spent on buying
    back shares and repaying loans.
    ASOS
    ASOS
    Microsoft
    Microsoft
    Rolls
    Royce
    Rolls
    Royce

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