Category: Money tips Release Date: 2007-05-08
Cash flow statement Net cash flows from operating activities and net income disparity between the income statement, is because:
1, affecting matters of profits is not necessarily simultaneous cash inflow and outflow. Some revenue, increase profits but not cash flow occurs. For example, a company's current operating income of 8 billion yuan, while the current period there are additional accounts receivable more than 700 million yuan, which increase revenue and profits but does not place a matter of cash flow, is caused by the difference between the two generated One of the reasons. Some listed companies accounts receivable management weaknesses, not in a timely manner and services trade receivables payment collection and settlement work, while others rely on related party transactions of listed companies supporting its operating results, and related parties of funds have been delayed, not in place. The consequences of these circumstances will be reflected in the cash flow statement, and even the company the number of operations almost no cash inflow, but the operating cost of the total to pay, purchase goods, pay taxes, large amounts of cash outflow occurs so that the cash from operating activities net flow negative, so that the company's cash flow difficulty. Delays in accounts receivable could not be recovered, to a certain extent, has also exposed the risks of the recognition of revenue. Some costs, reduce profits but not accompanied by cash outflows. For example, the fixed assets, depreciation, amortization of intangible assets, but on an accrual basis, matching principle requires that the acquisition costs of these assets in a reasonable period to use them to benefit-sharing, do not need to pay cash.
2, due to the need for classification of cash flows. Net income reflects the company's operating, investing and financing activities, financial results for the three, while the cash flow statement on the need to separately reflect the operations, investment and financing activities cash flows. For example, interest on borrowings to pay for operating activities, both to reduce the cash outflow of profits occurred, but the cash flow statement as a fund-raising activities will be cash flow shows that, not as a cash outflow from operating activities reflected. In another example, the transfer of net short-term bond investments made, both to increase profits in cash flow occurred, but the cash flow statement will be as a cash inflow from investing activities listed, not as a cash inflow from operating activities reflected.
These two points is to make the net cash flows from operating activities generated net profit of reason for the difference, in fact, cash flow is also required to disclose the contents of the notes. Income Statement lists the company's net profit achieved a certain period, but did not reveal the relationship with the cash flow, balance sheet provides the monetary funds of the company and the beginning of the end of the addition and changes, but did not reveal the reason for the change. The cash flow statement as a bridge to communicate the above two tables of accounting information, so that the external financial statements of listed companies to further improve the system, to investors and creditors to provide more comprehensive and useful information.
Many people think that only the cash flow generated from operating activities provided net cash flows are the reporting period, excluding the operating results of water, while the income statement profit data provided by the balance sheet because there are more accounts receivable and includes a certain degree of moisture. This is not unreasonable.
However, in the strict accrual accounting for operating results, due to impairment of assets fully into account factors, and impairment of assets or direct write-off impairment loss of a way to impairment amount recognized as an expense, and taking into account into current profit, therefore, prepared in accordance with accrual accounting statements reflected in current operating results are also trustworthy. That is to say, there is no need to over-exaggerate the cash flow statement would reveal or reflect the operating results of listed companies, the role of the current period. In this regard, financial analysis, the focus remained on the balance sheet and income statement.
