Process payment documentation

Components of cash flow

1 Money-Flow from Operations
Operating activities include a company’s regular business operations.
Inflows are generated by selling goods or rendering services, including the collection of sundry debtors.(various
borrowews) However,
money outflows stream /run through various monetary payments like the purchase of inventory,
releasing /discharging salaries, taxes, and miscellaneous operating expenses (OpEx). It also includes the
purchase and sale of trading securities. Trading securities are bought and held principally for the
purpose of selling them in the near future with the objective of generating profit on short-term price
changes
2 Money-Flow from Investing
Investing activities refer to the funds contributed or acquired from purchasing or selling securities or investments. In
such a case, money outflow results from the purchase of property, plant, equipment (PPE), and other investment
instruments. Shows how much money has been made or spent on investing activities.

Money inflow is generated by selling the possessed securities. Such exchanges exclude securities held for dealing and
trading activities.

3 Money-Flow from Financing

Financing activities primarily include any receipts and payments related to capital. The
inflow from financing refers to the raising of capital from equity or long-term debts. It
involves cash receipts from issuing common stock, preferred stock, bonds, and various
short-term and long-term borrowings. Thus, there are two significant sources of finance
—shareholders and creditors.
In contrast, money outflow comprises repayment of borrowings, the redemption
of bonds, treasury stock repurchases, and payment of dividends. However, indirect
borrowing from accounts payable is classified as money flow from operating activities
and not from financing activities. This may include transactions involving
issuing debt. It may also relate to equity and dividends being paid
out.

Summary

Cash flow statement items are

1) operating activities
2) Investing activities
3) Financial activities
Cash flow refers to the net balance of cash moving into and out of a business at a specific point in time.
 CF from operating activities includes :
 Cash that enter into determination of net income (Revenue, cost and expenses)
 CF from investing activities reports
  cash transaction for acquisition and sale of relatively long term permanent
assets
 CF from financing activities reports
 cash transaction related to cash investment by owner, and borrowing and cash
withdrawals by owner

Terms .

Cash investment: A cash investment is a short-term obligation, usually fewer than 90 days, that provides
a return in the form of interest payments. Cash investments offer a low return compared to other
investments: eg:saving account ,Money market (commercial paper ,Treasury bills) and CD’s)

Securities : investment securities are bonds and shares that have been acquired for investment
purposes.

Bond: Bonds are issued by governments and corporations when they want to raise money.
By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face
value of the loan on a specific date, and to pay you periodic interest payments along the
way, usually twice a year
Stocks are a type of security that gives stockholders a share of ownership in a company. Stocks also are
called “equitie. A stock is a general term used to describe the ownership certificates of any company

long-term debts: it generally refers to a company's loans and other liabilities

that will not become due within one year of the balance sheet date. (The
amount that will be due within one year is reported on the balance sheet as a
current liability.)

common stock, Common and preferred stock both represent a proportional share of
ownership in a company, but you are entitled to different rights depending on which you
invest in. Both preferred and common stocks can be sold or traded on an exchange .

long-term borrowings. Long Term Borrowings means Interest-Bearing Liabilities more

than 1 year including Bonds, Other Borrowings and Other Liabilities (Regulatory Liabilities).
Total Debt = Long Term Borrowings + Short Term Borrowings + Current Maturities of
Long Term Borrowings.

treasury stock , What are Treasury Bills? :

When the government goes to the financial market to raise money, it does so by issuing two
types of debt instruments — treasury bills and government bonds. Treasury bills are issued when
the government needs money for a short period. These bills are issued only by the central
government, and the interest on them is determined by market forces.

dividends: a payment by a company of a part of its profit to the people who

own shares (= units of ownership) in the company