LAPORAN ARUS KASLAPORAN ARUS KAS

(STATEMENT OF CASH FLOWS)

Primary Purpose: To provide relevant information

about the cash receipts and cash payments of an

enterprise during a period.

The statement provides answers to the following

questions:

1. Where did the cash come from?

2. What was the cash used for?

3. What was the change in the cash balance?

Purpose of the Statement of Purpose of the Statement of Cash FlowsCash Flows

Purpose of the Statement of Purpose of the Statement of Cash FlowsCash Flows

LAPORAN ARUS KASLAPORAN ARUS KAS (STATEMENT OF CASH FLOWS)(STATEMENT OF CASH FLOWS)

Ada 2 macam :Ada 2 macam :- Direct MethodDirect Method

- Indirect MethodIndirect Method

Contoh –Indirect methodContoh –Indirect methodContoh –Indirect methodContoh –Indirect method

LO 7

Net Cash Flow from Operating ActivitiesNet Cash Flow from Operating Activities— Indirect Method— Indirect Method

Net Cash Flow from Operating ActivitiesNet Cash Flow from Operating Activities— Indirect Method— Indirect Method

Net Cash Flow from Operating Direct MethodNet Cash Flow from Operating Direct MethodNet Cash Flow from Operating Direct MethodNet Cash Flow from Operating Direct Method

LO 7

Contoh – Direct MethodContoh – Direct MethodContoh – Direct MethodContoh – Direct Method

LO 8

OperatingOperatingOperatingOperating

Cash inflows and outflows from operations.

InvestingInvestingInvestingInvesting

Cash inflows and outflows from non-current assets.

FinancingFinancingFinancingFinancing

Cash inflows and outflows from non-current liabilities and equity.

Statement helps users evaluate liquidity, solvency, and financial flexibility.

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Illustration 5-19

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Information obtained from several sources:

(1) comparative statement of financial position,

(2) current income statement, and

(3) selected transaction data.

Sources of Information

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Exercise: On January 1, 2011, in its first year of

operations, Telemarketing Inc. issued 50,000 ordinary shares

($1 par value) for $50,000 cash. The company rented its

office space, furniture, and telecommunications equipment

and performed marketing services throughout the first year.

In June 2011 the company purchased land for $15,000. Next

illustration shows the company’s comparative statement of

financial position at the beginning and end of 2011.

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

LO 6LO 6

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparing the Statement of Cash Flows

Determine:

1. Cash provided by (or used in) operating activities.

2. Cash provided by or used in investing and financing activities.

3. Determine the change (increase or decrease) in cash during the period.

4. Reconcile the change in cash with the beginning and the ending cash balances.

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Cash provided by operating activities

The Statement The Statement of Cash Flowsof Cash Flows

The Statement The Statement of Cash Flowsof Cash Flows

Next, the company determines its investing and financing activities.

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

Exercise: Keyser Beverage Company reported the following items in the most recent year.

Activity

Operating

Financing

Operating

Operating

Investing

Operating

Financing

Required: Prepare a Statement of Cash Flows

Net income $40,000

Dividends paid 5,000

Increase in accounts receivable 10,000

Increase in accounts payable 7,000

Purchase of equipment 8,000

Depreciation expense 4,000

Issue of notes payable 20,000

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

Preparation of the Statement of Preparation of the Statement of Cash FlowsCash Flows

Statement of Cash Flows Statement of Cash Flow (in thousands)

Operating activities

Net income 40,000$

I ncrease in accounts receivable (10,000)

I ncrease in accounts payable 7,000

Depreciation expense 4,000

Cash fl ow f rom operations 41,000

Investing activities

Purchase of equipment (8,000)

Financing activities

Proceeds f rom notes payable 20,000

Dividends paid (5,000)

Cash fl ow f rom financing 15,000

Increase in cash 48,000$

Noncash credit to revenues.

Noncash charge to expenses.

Issuance of ordinary shares to purchase assets.

Conversion of bonds into ordinary shares.

Issuance of debt to purchase assets.

Exchanges on long-lived assets.

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Preparation of the Statement Preparation of the Statement of Cash Flowsof Cash Flows

Significant financing and investing activities that do not affect cash are reported in either a separate schedule at the bottom of the statement of cash flows or in the notes.

Examples include:

Significant Non-Cash Activities

Preparation of the Statement of Cash FlowsPreparation of the Statement of Cash FlowsPreparation of the Statement of Cash FlowsPreparation of the Statement of Cash Flows

Usefulness of the Statement of Usefulness of the Statement of Cash FlowsCash Flows

Usefulness of the Statement of Usefulness of the Statement of Cash FlowsCash Flows

Ratio indicates whether the company can pay off its current liabilities from its operations. A ratio near 1:1 is good.

Financial Liquidity

Net Cash Provided by Operating Activities

Average Current Liabilities

Current Cash Debt Coverage

Ratio =

Usefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash Flows

This ratio indicates a company’s ability to repay its liabilities from net cash provided by operating activities, without having to liquidate the assets employed in its operations.

Financial Flexibility

Average Total Liabilities

Cash Debt Coverage

Ratio =

Net Cash Provided by Operating Activities

Usefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash FlowsUsefulness of the Statement of Cash Flows

The amount of discretionary cash flow a company has for purchasing additional investments, retiring its debt, purchasing treasury stock, or simply adding to its liquidity.

Free Cash Flow