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The Corporate Finance Institute Accounting
Investing Activities
Sale of land 200
Purchase of equipment (300)
Net cash from investing activities (100)
Financing Activities
Common share dividends (200)
Payment on long term debt (300)
Net cash from financing activities (500)
Beginning Cash Balance X
Ending Cash Balance Y
What Can the Statement of Cash Flows Tell Us?
• Cash from operating activities can be compared to the company’s
net income to determine the quality of earnings. If cash from
operating activities is higher than net income, earnings are said to be
“high quality.”
• This statement is useful to investors because under the notion that
cash is king, it allows investors to get an overall sense of the cash
inflows and outflows of the company, whether these numbers are
positive, and achieve a general understanding of the company’s
overall performance.
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