1. How to calculate cash-flow in different ways.
Cash flow is the movement of cash into or out of a business, project, or financial product. It is usually measured during a specified,finite period of time.
The following is the general format for a statement of cash flows:
|Cash provided (or used) by: |
| Operatingactivities |$XXX |
| Investing activities |$XXX |
| Financing activities |$XXX ||Net increase (decrease) in cash and cash equivalents |$XXX |
|Cash and cash equivalents at beginning of year |$XXX |
|Cash and cash equivalents at end of year|$XXX |
There are two methods that are used in calculating and reporting the amount of net cash flow from operating activities: the indirect method and the direct method.Although both produce identical results, the indirect method is used more often because it reconciles the difference between net income and the net cash flow provided by operations.
2. What is networking capital? How we calculate it?
Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business. The working capital can becalculated very simply by subtracting a company’s total current liabilities from its total current assets.
Through this formula, a working capital amount can be determined to be either positive ornegative. Naturally, this will rely largely on the amount of debt owed by the company. It should not come as a surprise that having plenty of working capital tends to help companies achieve more success.This follows because working capital allows companies to grow smoothly and make necessary improvements to their corporate operations.
On the other hand, companies that are operating with...