1. The Statement of Cash Flows

2. Sebagus apakah laporan arus kas itu ?
Apakah sebuah laporan arus kas menceritakan hal yg belum diketahui dari neraca dan laporan rugi laba ?

3. What Good Is a Cash Flow Statement?
Ya karena ada situasi dimana laba tidak dapat memberikan gambaran yg jelas atas kinerja perusahaan ?

4. What Good Is a Cash Flow Statement?
Sehingga laporan arus kas menjadi instrumen penting dalam penilain laba
Begitu juga hal-hal lain yg berhubungan dengan laporan keuangan akan ada di laporan arus kas
Laporan arus kas menjelaskan perubahan pada kas atau setara kas dalam periode tertentu

5. Structure of the Cash Flow Statement
Dapat segera ditukar dengan kas ketika diperlukan dan sangat dekat dengan masa jatuh temponya sehingga kecil resiko terjadinya perubahan nilai akibat perubahan tingkat suku bunga
Investasi jangka pendek yg sangat likuid .
Apakah maksud setara kas ? 3 2

6. Structure of the Cash Flow Statement
Cash Inflows
CASH INFLOWS
Operating
Activities
Investing
Financing 35

7. Cash Flow Patterns
Aktivitas operasi—Transaksi-transaksi dan kejadian-kejadian yg akan menentukan laba bersih.
Activitas Investasi—Transactions and events that involve the purchase and sale of securities, property, plant, equipment, and other assets not generally held for resale, and serta memberi dan menagih pinjaman
Financing Activities—Transactions and events dimana kas diperoleh dan dibayarkan kembali kepada pemilik dan kreditor. 6 5

8. Pola Arus Kas
Over the Life of a Company
Start-up, High-Growth Company/PT baru yang sedang tumbuh pesat
Investing
Operating
Financing

9. Cash Flow Patterns
Over the Life of a Company
Steady-State Company/PT yg sedang mempertahan kan posisi
Investing
Financing
Dividends
Operating

10. Cash Flow Patterns Cash Cow/PT yg sudah Mapan Investing Financing
Over the Life of a Company
Cash Cow/PT yg sudah Mapan
Investing
Loan Repayment
Financing
Share Repurchases
Dividends
Operating

11. Noncash Transactions
Investing and financing activities that do not affect cash.
Significant transactions should be disclosed separately.
These transactions do not affect the statement of cash flows. 19 13

12. Reporting Cash Flows from Operations
Direct Method—A method of reporting net cash flows from operations that shows cash receipts and payments for a period of time. This method is more straight forward.
Indirect Method—A method of reporting net cash flow from operations that involves reconciling net income to a cash basis. It shows how noncash flows affect net income. 20 14

13. The Direct Method
This method reports directly the major classes of operating cash receipts and payments of an entity during a period.
Accrual-basis revenues and expenses must be converted to equivalent cash receipts and payments.
The amount of cash actually collected or paid is determined. 33 21

14. Indirect Method The indirect method makes the following adjustments:
Adjustments for receivables and other current operating assets.
Adjustments for payables and other current liabilities.
Adjustments for depreciation and other noncash items.
Adjustments for gains and losses. 21 15

15. Operating Activities Cash Inflow Cash Outflow Cash receipt of sales
Collection of receivables
Interest revenue
Dividend revenue
Cash Outflow
Inventory payments
Interest payments
Wages
Utilities
Rent 13 7

16. Relationship Between Net Income and Operating Cash Flow
Business dalam aktivitas operasi
Kas diterima dan dikeluarkan
Arus kas operasi
Gunakan aturan akuntansi akrual
Hilangkan akrual untuk mendapatkan arus kas
Laba bersih 16

17. Example of Operating Activities Section for the Direct Method
Sales and Cash Collected from Customers:
Beginning accounts receivable $ 40
+ Sales
= Cash available for collection $190
– Ending accounts receivable
= Cash Collected from Customers $130 64 37

18. Example of Operating Activities Section for the Direct Method
Cost of Goods Sold and Cash Paid for Inventory:
Ending inventory $ 75
+ Cost of goods sold 80
= Required inventory $155
– Beginning inventory 100
= Cash paid for inventory this year $ 55

19. Example of Operating Activities Section for the Direct Method
Wages Expense and Cash Paid for Wages:
Beginning wages payable $ 7
+ Wages expense 25
= Total obligation to employee $32
– Ending wages payable 10
= Cash paid for wages $22

20. Adjustments for Gains and Losses
Gains or losses do not represent the cash effect of the transaction.
Adjustment to
Account Net Income
Losses
Gains
These adjustments are made to net income since the sale of an investment is an investing activity, not an operating activity. 32 20

21. Adjustments for Receivables
Changes in accounts directly affect revenues recorded on an accrual basis.
Account Adjustment to
Account Change Net Income
Accounts Receivable
Inventory 25 17

22. Adjustments for Payables
Changes in liabilities mean the reverse of changes in current operating asset accounts.
Account Adjustment to
Account Change Net Income
Accounts Payable
Wages Payable 28 18

23. Noncash Adjustments
Depreciation and similar noncash items do not affect cash and are not reported on the statement of cash flows.
Any noncash item that reduces net income should be added back to net income in the indirect method.
Any noncash item that increases net income should be subtracted from net income in the indirect method. 29 19

24. Investing Activities Cash Inflow Cash Outflow Sale of plant assets
Sale of securities, other than trading securities
Collection of principal on loans
Cash Outflow
Purchase of plant assets
Purchase of securities, other than trading securities
Making of loans with other entities 15 9

25. Financing Activities Cash Inflow Cash Outflow Issuance of own stock
Borrowings
Cash Outflow
Dividend payments
Repaying principal on borrowing
Treasury Stock purchase 17 11

26. Differences between Income and Cash from Operations
Cash from Net
Company Name Operations Income Difference
General Motors $19,750 $ 4,452 $(15,298 )
Lehman Brothers (14,733 ) 1,775 16,508
Ford Motors 33,764 3,467 (30,297 )
Citigroup 2, ,519 10,846
Year (All amounts are in millions)
SOURCE: Standard and Poor COMPUTSTAT

27. General Format of a Statement of Cash Flows
Cash Provided by (Used for):
Operating Activities $XXX
Investing Activities XXX
Financing Activities XXX
Net Increase (Decrease) in Cash $XXX
Cash—Beginning of Year XXX
Cash—End of Year $XXX 12 6

28. Preparing a Cash Flow Statement
1. Compute how much the cash balance changed during the year.
2. Convert the income statement from an accrual-basis to a cash-basis summary of operations.
a. Eliminate expenses that do not involve the outflow of cash, such as depreciation.
b. Eliminate gains and losses associated with investing or financing activities.
c. Adjust for changes in the balances of current assets and current liabilities. 49 22

29. Preparing a Cash Flow Statement
3. Analyze the long-term assets to identify the cash flow effects of investing activities.
4. Analyze the long-term debt and stockholders’ equity account to determine the cash flow effects of any financing transactions.
5. Make sure that the total new cash flow from operating, investing, and financing activities is equal to the net increase or decrease in cash as computed in Step 1, then prepare a formal statement.
6. Prepare supplement disclosure of significant noncash transactions.

30. Example: Comparative Balance Sheet
2005
2004
Assets
Cash and Cash Equivalents
Accounts Receivable
Inventory
Equipment
Accumulated Depreciation
Total Assets
$ 82
180
170
200
(72)
$560
$ 40
150
200
140
(60)
$470
Liabilities and Equity
Accounts Payable
Long-term Notes Payable
Common Stock
Retained Earnings
Total Liabilities and Equity
$100
100
250
110
$560
$ 80 50
250 90
$470 50 23

31. Income Statement, 2005 Sales Expenses: Cost of goods sold
Selling and general expense
Depreciation
Interest expense
Operating income
Gain from sale of equipment
Income before income taxes
Income tax expense
Net income
$345
$120 58 20
2 (200 )
$145 5
$140 30
$110 51 24

32. Step 1 Determine change in cash and cash equivalents:53 26

33. (t-account or work sheet entry)
Step 2
Convert from an accrual-basis to a cash-basis summary of operations:
EXAMPLE: Eliminate depreciation expense, $44, because it does not require the use of cash.
Cash provided by operations 44
Accumulated Depreciation 44
(t-account or work sheet entry)

34. Add back $5 to cash provided by operations.
Step 2
Convert from an accrual-basis to a cash-basis summary of operations:
EXAMPLE: Eliminate the $5 gain from selling equipment.
Cash 33
Accumulated Depreciation 32
Equipment 60
Gain on Sale of Equipment 5
Add back $5 to cash provided by operations.

35. Step 3
Analyze the long-term assets to identify the ash flow effects of investing activities.
Expenditures for Property, Plant, and Equipment:
Beginning equipment $140
– Equipment sold during the year
= 80
– Ending equipment
= Expenditures for equipment during
year $ 120

36. Step 4
Analyze the long-term debt and stockholders’ equity accounts to determine the cash flow effects of any financing transactions:
Expenditures for Long-Term Debt:
Beginning L-T Notes Payable balance $ 50
– Notes reacquired during the year 0
= 50
– Ending L-T Notes Payable balance
= L-T Notes Payable issued during year 50

37. Step 4
Analyze the long-term debt and stockholders’ equity accounts to determine the cash flow effects of any financing transactions:
Payment of Dividends:
Beginning Retained Earnings balance $ 90
+ Net income 110
= 200
– Ending Retained Earnings balance
= Dividends paid 90

38. Steps 5 and 6
Steps 5 and 6 relate to actually preparing the formal and supplementary statements.

39. Operating Activities Section: Indirect Method
Cash Flows from Operating Activities:
Net income $110
Adjustments:
Depreciation expense
Gain on sale of equipment (5 )
Increase in accounts receivable (30 )
Decrease in inventory
Increase in accounts payable
Net Cash Provided by Operating
Activities $169
Continued 61 34

40. Operating Activities Section: Direct Method43
Cash Flows from Operating Activities:
Cash Collected from Customers $414
Cash Payments for:
Inventory (155 ) Selling & General Expenses (58 )
Interest (2 )
Income Taxes (30 ) (245 )
Net Cash Provided by Operating
Activities $169
Continued 68 41

41. Operating Activities Section: Direct Method
The investing and financing sections are the same whether the direct or indirect approach is used.

42. Investing and Financing Activities Sections
Cash Flows from Investing Activities:
Proceeds from sale of equipment $ 33
Purchase of equipment (120 )
Net cash provided by investing
activities (87 )
Cash Flows from Financing Activities:
Issuance of long-term notes payable 50
Payment of cash dividends (90 )
Net cash used for financing activities (40 )
Net increase in cash 42
Cash, January 1,
Cash, December 31,

43. Investing and Financing Activities Sections
Cash Flows from Investing Activities:
Proceeds from sale of equipment $ 33
Purchase of equipment (120 )
Net cash provided by investing
activities (87 )
Cash Flows from Financing Activities:
Issuance of long-term notes payable 50
Payment of cash dividends (90 )
Net cash used for financing activities (40 )
Net increase in cash 42
Cash, January 1,
Cash, December 31,

44. Assessing Financial Strength
Financial strength is a function of—
Liquidity
Profitability
Growth potential
Risk

45. Assessing Financial Strength
Cash flow-to-net income
Cash from operations
Net income
Measure of earnings quality
Tends to be greater than 1
Should remain fairly stable for the years for a specific company

46. Assessing Financial Strength
Cash flow adequacy
Cash from operations
Net income
Measures relationship between investment spending and cash generated by operations
Indicate a company’s attitude towards reinvestment in long-lived production assets
When ratio is small it indicates that cash flows from operations fall short of funding growth

47. Assessing Financial Strength
Cash times interest earned
Cash from operations + Interest paid + Taxes paid
Interest expense
Measures ability to service debt
Generally, a higher ratio indicates more solvency

48. Forecasted Statement of Cash Flows
Six Steps
1. Compute the change in cash.
2. Convert the income statement from an accrual to cash basis.
3. Analyze the long-term asset accounts.
4. Analyze the long-term debt and stockholders’ equity.
5. Prepare the forecasted statement of cash flows.
6. Disclose noncash activities.

49. The End