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Introduction Analyzing Statements of Cash Flows 2

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21 views1 page

Introduction Analyzing Statements of Cash Flows 2

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armor.cover
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CFA Program Level I for November 2024 $ & '

( $

K Home ) # Introduction 3 4 7 6
Lessons Table of Contents Confidence Levels Notes Bookmarks Highlights Introduction
u Study Plan

k Lessons

g Flashcards

r Practice INTRODUCTION
v Mock Exams An analysis of a company’s statement of cash flows provides crucial information for evaluating a company’s
financial position and for forecasting its future cash flows, which is foundational to the valuation of the
j Game Center
company’s debt and equity securities. This module discusses tools and techniques for analyzing the
e Discussions statement of cash flows, including the analysis of sources and uses of cash and cash flow, common-size
analysis, and the calculation of free cash flow measures and cash flow ratios.
B Search

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Learning Module Overview
High

An evaluation of a cash flow statement involves an assessment of the sources and uses of cash and Medium
the main drivers of cash flow within operating, investing, and financing activities.
Analyst can use common-size statement analysis for the cash flow statement by expressing cash flow Low

items as a percentage of total cash inflows/total cash outflows or as a percentage of net revenues.
The cash flow statement can be used to calculate free cash flow to the firm (FCFF) and free cash flow Continue !
to equity (FCFE), which are important profit measures for investors.
The cash flow statement may also be used to calculate financial ratios that measure a company’s Category
profitability, performance, and financial position. Analysts use these ratios to evaluate the company Analyzing Statements of Cash
over time and to compare multiple companies. Flows II

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