CH. 11 Statement of Cash Flows

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cash conversion cycle

measurement of the amount of time a company's cash is tied up in its operations.

cash flow statement

financial statement that shows all of the sources and all of the uses of cash for an accounting period; also called the statement of cash flows.

direct method

format of the operating activities section of the statement of cash flows; it lists the cash receipts and cash payments resulting from a company's day-to-day operations.

financing activities

activities related to the issuance of, and repayment of, long-term debt or to the issuance of stock and the payment of dividends; it's a section of the statement of cash flows.

free cash flow

anticipated amount of cash available from operations after paying for planned investments in long-term assets and paying dividends.

indirect method

format of the operating activities section of the statement of cash flows; it starts with net income and reconciles to net cash provided by operating activities.

investing activities

activities that increase or decrease long-term assets; it's a section of the statement of cash flows.

operating activities

activities that create revenue or expense in the entity's major line of business; it's a section of the statement of cash flows. activities that affect the income statement.

statement of cash flows

financial statement that shows all of the sources and all of the uses of cash for an accounting period; also called the cash flow statement.

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