1. FINANCIAL STATEMENT ANALYSIS
STATEMENT OF CASH FLOWS

2. funds generated from its operations (profit) and
FINANCIAL STATEMENTS
Statement of Cash Flows
Funds are the financial sources obtained from its activity or financing activity. There are two types of funds;
funds generated from its operations (profit) and
Long term funds raised by issue of shares (paid- in capital), debentures or sale of assets

3. Fund flows are reported in; Fund Flow Statement,
FINANCIAL STATEMENTS
Statement of Cash Flows
Fund flows are reported in;
Fund Flow Statement,
Changes in Working Capital and
Cash Flow Statement

4. Statement of Cash Flows
FINANCIAL STATEMENTS
Statement of Cash Flows
Fund Flow Statement is prepared to analyze the changes in financial position of the entity between previous period (opening) and current (ending) period.
This statement shows the inflow and outflow of funds.

5. FINANCIAL STATEMENTS
Statement of Cash Flows
Changes in Working Capital Statement is prepared on the base of working capital.

6. Statement of Cash Flows
FINANCIAL STATEMENTS
Statement of Cash Flows
This statement is important to analyze;
How much cash is generated form or used in operations?
How are dividends paid ?
What is the sources of cash for debt payments?
How is the investment activities financed?
What is the source of cash for new fixed assets?
Why the cash get low, when the income increase?
What is the use of cash received from new financing?

7. Statement of Cash Flows
FINANCIAL STATEMENTS
Statement of Cash Flows
In meaning of cash, cash fund flows are reported in cash flow.
The purpose of statement of cash flows is to provide information on cash inflows and outflows for a period.
It also separates the sources and uses of cash flow by separating them into operating, investing and financing activities.

8. Cash Inflows and Outflows

9. What is Cash and Cash Equivalents?
FINANCIAL STATEMENTS
Preparing of Statement of Cash Flows
In Statement of Cash Flows cash receipts and cash payments by operating, financing and investing activities are reported.
What is Cash and Cash Equivalents?
Cash comprises cash on hand and demand deposits.
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

10. Cash flows are inflows and outflows of cash and cash equivalents.
FINANCIAL STATEMENTS
Preparing of Statement of Cash Flows
Balance Sheet
20X1
20X2
Increase
Decrease
Cash and Cash Equivalents
690
1.025
335**
Financial Assets
100
150 50
Trade Receivables
600
500
(100)
Inventories
610
835
225
Long-term Financial Assets
300
340 40
Tangible Assets
900
750
(150)
What is Cash Flows?
Cash flows are inflows and outflows of cash and cash equivalents.

11. Preparing of Statement of Cash Flows
FINANCIAL STATEMENTS
Preparing of Statement of Cash Flows
Balance Sheet
20X1
20X2
Increase
Decrease
Cash and Cash Equivalents
690
1.025
335**
Financial Assets
100
150 50
Trade Receivables
600
500
(100)
Inventories
610
835
225
Long-term Financial Assets
300
340 40
Tangible Assets
900
750
(150)
What is Cash Flows?
The cash inflows and outflows of an entity are reported by its operating, financing and investing activities.

12. Preparing of Statement of Cash Flows
FINANCIAL STATEMENTS
Preparing of Statement of Cash Flows
What is Cash Flows?
Operating activities are the principal revenue-producing activities of the entity and other activities that are not investing or financing activities.
Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.
Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.
Balance Sheet
20X1
20X2
Increase
Decrease
Cash and Cash Equivalents
690
1.025
335**
Financial Assets
100
150 50
Trade Receivables
600
500
(100)
Inventories
610
835
225
Long-term Financial Assets
300
340 40
Tangible Assets
900
750
(150)

13. Presentation of Statement of Cash Flows
Examples of Cash Flows from Operating Activities
cash receipts (inflow) from the sale of goods and the rendering of services, royalties, fees, commissions and other revenue;
Income Statement
cash payments to suppliers for goods and services, employees
changes in working capital (Increase/Decrease in Current Assets and Current Liabilities unless they can be specifically identified with financing and investing activities)
Balances Sheet
cash payments or refunds of income taxes
Balance Sheet
Cash flows from operating activities are primarily derived from the principal revenue- producing activities of the entity.

14. Presentation of Statement of Cash Flows
Cash Flows from Operating Activities
A. Profit of the Current Period
Profit After Tax of Current Period
Provisions of Tax
B. Income Items Which are not Caused Cash Inflow (-)
Income Accruals
Deferred Income
Fair Value Profit
Reversals of provisions.
C. Expense Items Which are not Caused Cash Outflow (+)
Amortization Costs
Provisions
Expense Accruals
Fair Value Loss
Cash flows from operating activities comprises the income and expense which reported in income statement. However the income statement must be presented according to accrual basis. Accrual accounting, which is used in income statement requires that income and expenses must be reported when its earned/incurred regardless of received or paid in cash.

15. Presentation of Statement of Cash Flows
Cash Flows from Operating Activities
A. Profit of the Current Period
Profit After Tax of Current Period
Provisions of Tax
B. Income Items Which are not Caused Cash Inflow (-)
Income Accruals
Deferred Income
Fair Value Profit
Reversals of provisions.
C. Expense Items Which are not Caused Cash Outflow (+)
Amortization Costs
Provisions
Expense Accruals
Fair Value Loss
So the information reported in income statement must be converted to cash basis. In converting to cash basis, the income items which are not caused cash inflow and the expense items which are not caused cash outflow must be eliminated.

16. Presentation of Statement of Cash Flows
The operating activities comprise the changes in working capital. Working capital items are refers to the assets and liabilities used in normal operating cycle.
Cash Flows from Operating Activities
A. Profit of the Current Period (+)
B. Income Items Which are not Caused Cash Inflow (-)
C. Expense Items Which are not Caused Cash Outflow (+)
D. Tax Payments (-)
E. Changes in Working Capital
Decrease/Increase in Trade Receivables (+,-)
Decrease/Increase in Other Receivables (+,-)
Decrease/Increase in Inventories (+, -)
Decrease/Increase in Other Current Assets (+, -)
Decrease/Increase in Trade Payables (-,+)
Decrease/Increase in Other Current Liabilities (-, +)

17. Presentation of Statement of Cash Flows
Investing Activities
The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources to generate future income and cash flows.
Only expenditures that result in a recognized asset in the statement of financial position are proper for classification as investing activities.

18. Presentation of Statement of Cash Flows
Cash Flows from Investing Activities
Cash receipts from sales of financial assets (+)
Cash receipts from sales of property,(+)
Cash receipts from sales of intangible assets (+)
Cash payments for acquire of financial assets (-)
Cash payments for acquire of property,(-)
Cash payments for acquire of intangible assets (-)
Investing Activities
The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources to generate future income and cash flows.
Only expenditures that result in a recognized asset in the statement of financial position are proper for classification as investing activities.

19. Presentation of Statement of Cash Flows
Examples of Cash Flows from Financing Activities
Cash inflows from ıssuing shares or other equity ınstruments (+)
Cash inflows from issuing debentures, loans, notes, bonds, mortgages and other short-term and long term borrowings (+)
Cash repayments (outflow) of amounts short-term and long-term borrowings (-)
Cash payments (outflow) to owners as dividends
Financing Activities
The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of capital to the entity.

20. Presentation of Statement of Cash Flows
The financial statements of ABC Co. are as follows:
Balance Sheet
20X1
20X2
Cash and Cash Equivalents
690
1.025
Financial Assets
100
150
Trade Receivables
600
500
Inventories
610
835
Long-term Financial Assets
300
340
Tangible Assets
900
750
Total
3.200
3.600
Short-Term Loans
450
400
Trade Payables
550
Tax Payables
200
Tax Provisions 50
Long-Term Loans
800
Paid-in Capital
1.000
Reserves
Net Profit
350
Income Statement
 20X2
Sales
15.000
Cost of Goods Sold
(13.000)
Gross Profit
2.000
Operating Expenses
(1.300)
Operating Profit
700
Other Income
350
Other Expense
(150)
Interest Expense
(500)
Profit Before Tax
400
Tax Provisions
(50)
Net Profit
Additional Notes:
The investments in long term financial assets accounts 40 TL.
The amortization cost of current period is 150 TL.

21. Balance Sheet
20X1
20X2
Increase
Decrease
Cash and Cash Equivalents
690
1.025
335
Financial Assets
100
150 50
Trade Receivables
600
500
(100)
Inventories
610
835
225
Long-term Financial Assets
300
340 40
Tangible Assets
900
750
(150)
Total
3.200
3.600
Short-Term Loans
450
400
(50)
Trade Payables
550
Tax Payables
200
Tax Provisions
Long-Term Loans
800
Paid-in Capital
1.000
Reserves
Net Profit
350
STATEMENT OF CASH FLOW
  20X2
Cash Flows from Operating Activities
225
Cash Received from Profit
Profit Before Tax of Current Period
400
Expense Items Which are not Caused Cash Outflow (+)
- Amortization Costs (+)
150
Changes in Working Capital
- Decrease in Trade Receivables
100
- Decrease in Trade Payables
(150)
- Increase in Financial Assets
(50)
- Increase in Inventories
(225)
- Increase in Tax Payables
Tax Payments
(100)
Cash Flows from Investing Activities
(40)
Cash payments for acquire of Long-Term Financial Assets
Cash Flows from Financing Activities
Cash payments of Short-Term Loans
Cash inflows from long-term loans
300
Cash payments of Capital
Increase in Cash and Cash Equivalents
335
Beginning Cash and Cash Equivalents
690
Ending Cash and Cash Equivalents
1025