【正文】 equity minus new equity financing) Total )()()(SCFBCFACF??The cash flow received from the firm’s assets must equal the cash flows to the firm’s creditors and stockholders: 173 23 $42 $36 6 $42 231 The Statement of Cash Flows ? There is an official accounting statement called the statement of cash flows. ? This helps explain the change in accounting cash, which for . Composite is $33 million in 2021. ? The three ponents of the statement of cash flows are: ? Cash flow from operating activities ? Cash flow from investing activities ? Cash flow from financing activities 232 . Cash Flow from Operations To calculate cash flow from operations, start with ine, add back noncash items like depreciation and adjust for changes in current assets and liabilities (other than cash). Operations Net Ine Depreciation Deferred Taxes Changes in Assets and Liabilities Accounts Receivable Inventories Accounts Payable Accrued Expenses Other Total Cash Flow from Operations $86 90 13 24 11 16 18 $202 8 233 . Cash Flow from Investing Cash flow from investing activities involves changes in capital assets: acquisition of fixed assets and sales of fixed assets (., capital expenditures). Acquisition of fixed assets Sales of fixed assets Total Cash Flow from Investing Activities $198 25 $173 234 . Cash Flow from Financing Cash flows to and from creditors and owners include changes in equity and debt. Retirement of debt (includes notes) Proceeds from longterm debt sales $73 86 Total Cash Flow from Financing $4 Dividends Repurchase of stock 43 Proceeds from new stock issue 43 6 Change in notes payable 3 235 . Statement of Cash Flows The statement of cash flows is the addition of cash flows from operations, investing, and financing. Operations Net Ine Depreciation Deferred Taxes Changes in Assets and Liabilities Accounts Receivable Inventories Accounts Payable Accrued Expenses $86 90 13 24 11 16 18 Other Total Cash Flow from Operations $202 8 Acquisition of fixed assets Sales of fixed assets Total Cash Flow from Investing Activities $198 25 $173 Investing Activities Financing Activities Retirement of debt (includes notes) Proceeds from longterm debt sales $73 86 Dividends Repurchase of stock Proceeds from new stock issue Total Cash Flow from Financing 43 43 $4 6 Change in Cash (on the balance sheet) $33 Notes Payable 3 236 Cash Flow Management ? Earnings can be manipulated using subjective decisions required under GAAP ? Total cash flow is more objective, but the underlying ponents may also be ―managed‖ ? Moving cash flow from the investing section to the operating section may make the firm’s business appear more stable 237 Quick Quiz ? What is the difference between book value and market value? Which should we use for decision making purposes? ? What is the difference between accounting ine and cash flow? Which do we need to use when making decisions? ? What is the difference between average and marginal tax rates? Which should we use when making financial decisions? ? How do we determine a firm’s cash flows? What are the equations, and where do we find the information?