Describe the organization of the statement of cash flows. And how do you compute

Question

Describe the organization of the statement of cash flows. And how do you compute net income? What is the realization principle, and why may it lead to a difference in the timing of when revenues are recognized on the books and cash is collected? Explain Efficient market hypothesis and its three forms. What is an IPO, and what role does an investment banker play in the process? Suppose you own a security that you know can be easily sold in the secondary market, but the security will sell at a lower price than you paid for it. What would this mean for the security's marketability and liquidity?

Explanation / Answer

Question 1:

A statement of cash flows is a financial statement that shows the flow of cash under following three activities:

Cash flow from operations or operating activities shows the cash flow from core business of the organization which includes purchases, sales, net income etc.

Cash flow from investment includes cash flow from the sale and purchase of property, plant, equipment and other fixed assets.

Cash flow from financing activities includes the cash flow from issue of bonds, shares and other sources like payment of dividend etc.

Net Income is the difference between net revenue – total expenses

Net Income = Sales revenue- cost of goods sold – operating expenses – non operating income and expenses - taxes

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.