Chapter 10

Statement of
Cash Flows

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 Statement Use

• Internal users
– Determine dividend policy
– Evaluate cash generated by operations
– Review investing and financing policy
• External users
– Assess firm’s ability to increase dividends
– Assess firm’s ability to pay debt from operations
– Assess firm’s relationship of cash from operations to
total cash

Chapter 10, Slide #2

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Statement Structure

Cash flows from operations

+ Cash flows from investing activities
+ Cash flows from financing activities
= Change in cash
+ Beginning cash balance
= Ending cash balance

Chapter 10, Slide #3

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Sources and Uses of Cash

• Balance sheet identity (rearranged)

– NWC + fixed assets = long-term debt + equity
– NWC = cash + other CA – CL
– Cash = long-term debt + equity + CL – CA other than cash – fixed assets
• Sources
– Increasing long-term debt, equity, or current liabilities
– Decreasing current assets other than cash, or fixed assets
• Uses
– Decreasing long-term debt, equity, or current liabilities
– Increasing current assets other than cash, or fixed assets

18-4
 Operating Activities

The cash effects of transactions and other events that

enter into the determination of net income:

Cash inflows from Cash outflows for

• Sale of goods or services • Payments for acquisitions
• Returns on loans of inventory
(interest) • Payments to employees
• Return on equity • Payments for taxes
securities (dividends) • Payments for interest
• Payments for other
expenses
Chapter 10, Slide #5
Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 CONTOH ASII 2018

Chapter 10, Slide #6

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Jika digabungkan dengan laporan laba ruginya..

Chapter 10, Slide #7

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Investing Activities

Lending money and collecting on those loans and acquiring

and selling investments and productive long-term assets:

Cash inflows from Cash outflows for

• Receipts for loans • Loans to other entities
collected • Investment in debt or
• Sales of debt or equity equity securities
securities • Purchase of plant,
• Sales of plant, property, property, and equipment
and equipment

Chapter 10, Slide #8

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 CONTOH ASII 2019

Chapter 10, Slide #9

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Financing Activities

Borrowing and repaying long-term loans; issuing equity

securities; payment of dividends to shareholders:

Cash inflows from Cash outflows for

• Sale of equity securities • Payment of dividends
• Sale of bonds, mortgages, • Reacquisition of capital
notes, and other short- stock
and long-term borrowings • Payment of amounts
borrowed

Chapter 10, Slide #10

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 CONTOH ASII

Chapter 10, Slide #11

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Jika digabungkan maka..

ASII 2018 2017

Saldo Awal Kas 31.574 29.356
Arus Kas Operasi 27.692 23.285
Arus Kas Investasi - 29.731 - 14.941
Arus Kas Pendanaan - 4.873 - 6.184
Arus Kas Bersih - 6.912 2.160
Saldo Akhir Kas 24.941 31.574

Chapter 10, Slide #12

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Cash Flows From Operations

• 2 methods for operating section of Cash Flow:

• Direct method
– Presents the income statement on a cash basis
– Supplemental information required: reconciliation of net income to
cash provided by operations
• Indirect method
– Adjusts net income for items that affected net income but did not
affect cash
– Supplemental information required: cash paid for income taxes and
for interest
– Most widely used

Chapter 10, Slide #13

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Cash Flows From Operations:
Direct Method
Cash flows from operations:
Cash received from customers $ 370,000
Cash paid to suppliers and employees (310,000)
Interest received 10,000
Interest paid (net of amount capitalized) (4,000)
Income taxes paid (15,000)
Net cash provided by operations 51,000

Presents the income statement on a cash basis

Chapter 10, Slide #14

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Cash Flows From Operations:
Indirect Method
Cash flows from operations:
Net earnings $ 40,000
Provision for depreciation 6,000
Provision for allowance for doubtful accounts 1,000
Deferred income taxes 1,000
Loss on property, plant, and equipment disposals 2,000
Changes in operating assets and liabilities:
Receivables increase (2,000)
Inventories increase (4,000)
Accounts payable increase 5,000
Accrued income taxes increase 2,000
Net cash provided by operations $51,000

Adjusts net income for items that affected net income

but did not affect cash
Chapter 10, Slide #15
Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Cash Flows From Operations
Cash flows from operations:
Cash received from customers $ 370,000
Cash paid to suppliers and employees (310,000)
Interest received 10,000
Interest paid (net of amount capitalized) (4,000) Direct
Income taxes paid (15,000)
Net cash provided by operations 51,000

Cash flows from operations:

Net earnings $ 40,000
Provision for depreciation 6,000
Provision for allowance for doubtful accounts 1,000
Deferred income taxes 1,000
Loss on property, plant, and equipment disposals 2,000
Indirect Changes in operating assets and liabilities:
Receivables increase (2,000)
Inventories increase (4,000)
Accounts payable increase 5,000
Accrued income taxes increase 2,000
Net cash provided by operations $51,000
Chapter 10, Slide #16
Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Cash Flows From Investing Activities

Cash flows from investing activities:

Capital expenditures $ (30,000)
Proceeds from property, plant and equipment
disposals 6,000
Net cash used in investing activities (24,000)

Chapter 10, Slide #17

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Cash Flows From Financing Activities

Cash flows from financing activities:

Net proceeds from repayment of
commercial paper $ (4,000)
Proceeds from issuance of long-term debt 6,000
Dividends paid (5,000)
Net cash used in financing activities (3,000)

Chapter 10, Slide #18

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Statement of Cash Flows – Direct Method
(supplemental disclosures not illustrated)
OPERATING ACTIVITIES
Cash received from customers $ 370,000
Cash paid to suppliers and employees (310,000)
Interest received 10,000
Interest paid (4,000)
Income taxes paid (15,000)
Net cash provided (used) by operating activities 51,000
INVESTING ACTIVITIES
Capital expenditures (30,000)
Proceeds from property, plant, and equipment
disposals 6,000
Net cash provided (used) by operating activities (24,000)
FINANCING ACTIVITIES
Net proceeds from repayment of commercial paper (4,000)
Proceeds from issuance of long-term debt 6,000
Dividends paid (5,000)
Net cash provided (used) by financing activities (3,000)
Increase in Cash 24,000
Beginning cash balance 8,000
Ending cash balance $ 32,000
Chapter 10, Slide #19
Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Statement of Cash Flows – Indirect Method
(supplemental disclosures not illustrated)
OPERATING ACTIVITIES
Net earnings $ 40,000
Provision for depreciation 6,000
Provision for allowance for doubtful accounts 1,000
Deferred income taxes 1,000
Loss on property, plant, and equipment disposals 2,000
Changes in operating assets and liabilities:
Receivables increase (2,000)
Inventories increase (4,000)
Accounts payable increase 5,000
Accrued income taxes increase 2,000
Net cash provided (used) by operating activities 51,000
INVESTING ACTIVITIES
Capital expenditures (30,000)
Proceeds from property, plant, and equipment
disposals 6,000
Net cash provided (used) by operating activities (24,000)
FINANCING ACTIVITIES
Net proceeds from repayment of commercial paper (4,000)
Proceeds from issuance of long-term debt 6,000
Dividends paid (5,000)
Net cash provided (used) by financing activities (3,000)
Increase in Cash 24,000
Beginning cash balance 8,000
Ending cash balance $ 32,000
 THE IMPORTANCE OF CASH

• Sumber utama pembayaran hutang perusahaan

• Sumber utama pembayaran dividen
• Analisa Sumber dan Penggunaan Kas
• Rasio yang dibahas mengenai solvabilitas
perusahaan diukur dari cash from operating
activities

Chapter 10, Slide #21

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Operating Cash Flow/Current Maturities of
Long-Term Debt and Current Notes Payable
Operating Cash Flow
Current Maturities of Long-Term Debt
and Current Notes Payable

• Indicates a firm’s abilities to meet its current

maturities of debt
• Higher ratio indicates better liquidity

Chapter 10, Slide #22

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Operating Cash Flow to Total Debt
Operating Cash Flow
Total Debt

• Indicates a firm’s ability to cover total debt with

the yearly operating cash flow
• Conservative approach is to include all possible
balance sheet debt

Chapter 10, Slide #23

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 Operating Cash Flow per Share
Operating Cash Flow - Preferred Dividends
Diluted Weighted Average
Common Shares Outstanding

• A better indication of a firm’s ability to make

capital expenditure decisions and pay dividends
than is earnings per share
• Does not reflect firm’s profitability
– Firms are prohibited from reporting this statistic in
financial statements or in the notes thereto

Chapter 10, Slide #24

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
Operating Cash Flow to Cash Dividends
Operating Cash Flow
Cash Dividends

• Indicates a firm’s ability to cover cash dividends

with the yearly operating cash flow

Chapter 10, Slide #25

Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.
 TUGAS MINGGU KETUJUH

• Semua kelompok mempersiapkan analisa bagi investor

– Rasio seperti minggu lalu: EPS, PE, PBV dll
– Cek pergerakan harga saham dengan pencapaian internal perusahaan
(laba naik apakah harga saham jg naik dll)
– Bisa ditambahkan berita terkait kondisi perusahaan + hasil Analisa
minggu keempat
• Analisa arus kas
– Analisa aktivitas operasi, pendanaan dan investasi
– Sumber dan penggunaan kas
– Bandingkan dengan Analisa minggu keempat apakah sesuai
• Kesimpulan tugas: saham perusahaan layak dibeli / dijual di
tahun 2020 (sebelum pandemi)
Chapter 10, Slide #26
Copyright 2007 by Thomson South-Western, a part of The Thomson Corporation. All rights reserved.