excess used to acquire buildings and equipment, pay dividends, retire long-term debt, and conduct other investing and financing activities.
cash flow from investing activities
the acquisition of non-current assets, particularly property, plant, and equipment, usually represents a major ongoing use of cash.
cash flow from financing activities
a firm obtains cash from borrowing and from issuing common or preferred shares. it uses cash to pay dividends to shareholders, to repay borrowing, and to reacquire outstanding common or preferred stock.
free cash flow
excess of cash flow from operations over cash flow used for investing
reports that amount of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.
begins with net income for a period and then shows adjustments to net income to convert revenues to cash received from customers and to convert expenses to cash disbursed to various suppliers of goods and services.
computes cash flow from operations using both the direct and indirect methods.
cash change equation
change in cash = Change in liabilities + change in shareholder's equity - change in non cash assets.
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