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 labaBegitu juga hal-hal lain yg berhubungan dengan laporan keuangan akan ada di laporan arus kasLaporan 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 bungaInvestasi jangka pendek yg sangat likuid .Apakah maksud setara kas ?32
6 Structure of the Cash Flow Statement Cash InflowsCASH INFLOWSOperatingActivitiesInvestingFinancing35
7 Cash Flow PatternsAktivitas 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 pinjamanFinancing Activities—Transactions and events dimana kas diperoleh dan dibayarkan kembali kepada pemilik dan kreditor.65
8 Pola Arus KasOver the Life of a CompanyStart-up, High-Growth Company/PT baru yang sedang tumbuh pesatInvestingOperatingFinancing
9 Cash Flow PatternsOver the Life of a CompanySteady-State Company/PT yg sedang mempertahan kan posisiInvestingFinancingDividendsOperating
10 Cash Flow Patterns Cash Cow/PT yg sudah Mapan Investing Financing Over the Life of a CompanyCash Cow/PT yg sudah MapanInvestingLoan RepaymentFinancingShare RepurchasesDividendsOperating
11 Noncash TransactionsInvesting and financing activities that do not affect cash.Significant transactions should be disclosed separately.These transactions do not affect the statement of cash flows.1913
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.2014
13 The Direct MethodThis 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.3321
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.2115
15 Operating Activities Cash Inflow Cash Outflow Cash receipt of sales Collection of receivablesInterest revenueDividend revenueCash OutflowInventory paymentsInterest paymentsWagesUtilitiesRent137
16 Relationship Between Net Income and Operating Cash Flow Business dalam aktivitas operasiKas diterima dan dikeluarkanArus kas operasiGunakan aturan akuntansi akrualHilangkan akrual untuk mendapatkan arus kasLaba bersih16
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 $1306437
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 toAccount Net IncomeLossesGainsThese adjustments are made to net income since the sale of an investment is an investing activity, not an operating activity.3220
21 Adjustments for Receivables Changes in accounts directly affect revenues recorded on an accrual basis.Account Adjustment toAccount Change Net IncomeAccounts ReceivableInventory2517
22 Adjustments for Payables Changes in liabilities mean the reverse of changes in current operating asset accounts.Account Adjustment toAccount Change Net IncomeAccounts PayableWages Payable2818
23 Noncash AdjustmentsDepreciation 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.2919
24 Investing Activities Cash Inflow Cash Outflow Sale of plant assets Sale of securities, other than trading securitiesCollection of principal on loansCash OutflowPurchase of plant assetsPurchase of securities, other than trading securitiesMaking of loans with other entities159
25 Financing Activities Cash Inflow Cash Outflow Issuance of own stock BorrowingsCash OutflowDividend paymentsRepaying principal on borrowingTreasury Stock purchase1711
26 Differences between Income and Cash from Operations Cash from NetCompany Name Operations Income DifferenceGeneral Motors $19,750 $ 4,452 $(15,298 )Lehman Brothers (14,733 ) 1,775 16,508Ford Motors 33,764 3,467 (30,297 )Citigroup 2, ,519 10,846Year (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 $XXXInvesting Activities XXXFinancing Activities XXXNet Increase (Decrease) in Cash $XXXCash—Beginning of Year XXXCash—End of Year $XXX126
28 Preparing a Cash Flow Statement 1. Compute how much the cash balance changed during the year.2. Convert the income statement from an accrual-basis to a cash-basis summary of operations.a. Eliminate expenses that do not involve the outflow of cash, such as depreciation.b. Eliminate gains and losses associated with investing or financing activities.c. Adjust for changes in the balances of current assets and current liabilities.4922
29 Preparing a Cash Flow Statement 3. Analyze the long-term assets to identify the cash flow effects of investing activities.4. Analyze the long-term debt and stockholders’ equity account to determine the cash flow effects of any financing transactions.5. Make sure that the total new cash flow from operating, investing, and financing activities is equal to the net increase or decrease in cash as computed in Step 1, then prepare a formal statement.6. Prepare supplement disclosure of significant noncash transactions.
30 Example: Comparative Balance Sheet 20052004AssetsCash and Cash EquivalentsAccounts ReceivableInventoryEquipmentAccumulated DepreciationTotal Assets$ 82180170200(72)$560$ 40150200140(60)$470Liabilities and EquityAccounts PayableLong-term Notes PayableCommon StockRetained EarningsTotal Liabilities and Equity$100100250110$560$ 805025090$4705023
31 Income Statement, 2005 Sales Expenses: Cost of goods sold Selling and general expenseDepreciationInterest expenseOperating incomeGain from sale of equipmentIncome before income taxesIncome tax expenseNet income$345$12058202 (200 )$1455$14030$1105124
32 Step 1 Determine change in cash and cash equivalents: 5326
33 (t-account or work sheet entry) Step 2Convert 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 44Accumulated Depreciation 44(t-account or work sheet entry)
34 Add back $5 to cash provided by operations. Step 2Convert from an accrual-basis to a cash-basis summary of operations:EXAMPLE: Eliminate the $5 gain from selling equipment.Cash 33Accumulated Depreciation 32Equipment 60Gain on Sale of Equipment 5Add back $5 to cash provided by operations.
35 Step 3Analyze 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 duringyear $ 120
36 Step 4Analyze 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 4Analyze 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 6Steps 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 $110Adjustments:Depreciation expenseGain on sale of equipment (5 )Increase in accounts receivable (30 )Decrease in inventoryIncrease in accounts payableNet Cash Provided by OperatingActivities $169Continued6134
40 Operating Activities Section: Direct Method 43Cash Flows from Operating Activities:Cash Collected from Customers $414Cash Payments for:Inventory (155 ) Selling & General Expenses (58 )Interest (2 )Income Taxes (30 ) (245 )Net Cash Provided by OperatingActivities $169Continued6841
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 $ 33Purchase of equipment (120 )Net cash provided by investingactivities (87 )Cash Flows from Financing Activities:Issuance of long-term notes payable 50Payment of cash dividends (90 )Net cash used for financing activities (40 )Net increase in cash 42Cash, January 1,Cash, December 31,
43 Investing and Financing Activities Sections Cash Flows from Investing Activities:Proceeds from sale of equipment $ 33Purchase of equipment (120 )Net cash provided by investingactivities (87 )Cash Flows from Financing Activities:Issuance of long-term notes payable 50Payment of cash dividends (90 )Net cash used for financing activities (40 )Net increase in cash 42Cash, January 1,Cash, December 31,
44 Assessing Financial Strength Financial strength is a function of—LiquidityProfitabilityGrowth potentialRisk
45 Assessing Financial Strength Cash flow-to-net incomeCash from operationsNet incomeMeasure of earnings qualityTends to be greater than 1Should remain fairly stable for the years for a specific company
46 Assessing Financial Strength Cash flow adequacyCash from operationsNet incomeMeasures relationship between investment spending and cash generated by operationsIndicate a company’s attitude towards reinvestment in long-lived production assetsWhen ratio is small it indicates that cash flows from operations fall short of funding growth
47 Assessing Financial Strength Cash times interest earnedCash from operations + Interest paid + Taxes paidInterest expenseMeasures ability to service debtGenerally, a higher ratio indicates more solvency
48 Forecasted Statement of Cash Flows Six Steps1. 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.