2013년 11월 26일 화요일

About 'equity capital definition'|Understanding “Tier 1″ capital ratios







About 'equity capital definition'|Understanding “Tier 1″ capital ratios








The               cash               flow               statement               provides               key               information               about               the               financial               performance               of               your               business.

By               assimilating               inputs               from               the               balance               sheet               and               the               income               statement,               the               cash               flow               statement               summarizes               the               cash               inflows               and               outflows               of               your               company               to               help               you               evaluate               the               financial               health               of               your               business.

Typically,               the               cash               flow               statement               is               analyzed               using               the               indirect               method.

If               you               report               your               revenues               under               Generally               Accepted               Accounting               Principles               (GAAP),               you               use               the               accrual               basis               of               accounting               that               requires               revenues               to               be               reported               when               earned               and               expenses               to               be               recorded               when               incurred.
               Key               Components               of               Cash               Flow               Statement               
               
               Cash               flow               from               Operating               Activities               -               This               section               summarizes               cash               inflows               and               outflows               generated               by               your               principle               line               of               business,               and               it               adjusts               net               income               to               reflect               changes               in               revenues,               expenses               and               credit               transactions.

Your               income               statement               may               include               credit               sales               that               have               not               been               collected               yet               or               non-cash               expenses.

To               calculate               operating               cash               flow,               you               have               to               re-evaluate               non-cash               items               such               as               accounts               receivable,               inventory,               accounts               payable               and               accruals.
               For               example:
               1.

Accounts               Receivable               -If               accounts               receivable               decrease,               your               suppliers               have               paid               off               their               credit               and               you               have               collected               more               cash,               which               should               be               added               to               the               net               income.

If               accounts               receivable               increase,               you               have               collected               less               cash,               and               this               amount               should               be               deducted               from               net               income.
               2.

Inventory               -               if               you               report               increase               in               inventory,               you               have               spent               cash               to               purchase               raw               materials,               and               this               amount               should               be               deducted               from               net               income.

Under               the               GAAP               principles,               inventory               is               not               considered               to               be               an               expense               until               the               inventory               is               sold.

If               you               report               decrease               in               inventory,               the               amount               should               be               added               to               the               net               income.
               To               accurately               calculate               operating               cash               flow,               you               should:
               Add:               
               -               Decrease               in               accounts               receivable.


               -               Decrease               in               inventory.


               -               Increase               in               accounts               payable.


               -               Increase               in               accruals.
               Deduct               
               -               Increase               in               accounts               receivable.


               -               Increase               in               inventory.


               -               Decrease               in               accounts               payable.


               -               Decrease               in               accruals.


               
               3.

Cash               Flow               from               Investing               Activities               -               summarizes               capital               expenditures               for               your               company's               property,               plant               and               equipment,               purchases               of               securities,               sales               of               securities               and               collection               of               principal               on               loans.
               4.

Cash               Flow               from               Financing               Activities               -               includes               cash               flows               related               to               your               company's               debt               and               equity               financing               .

If               you               raise               capital               from               bond               or               stock               issuance,               these               funds               are               recorded               as               cash               inflows.

If               you               make               dividend               payments,               or               repurchase               of               stocks,               these               funds               are               considered               cash               outflows.
               The               net               cash               flow               is               calculated               by               adding               the               cash               flows               from               operating,               investing               and               financing               activities.
               Important               Considerations               for               Investors
               -               To               be               in               good               standing,               a               company               should               unfailingly               report               positive               net               cash               flow.
               -               The               operating               cash               flow               should               always               be               greater               than               zero               to               indicate               strong               growth               potential.

However,               if               a               company               unfailingly               reports               growth               on               income               statement               but               has               negative               cash               flow,               it               may               lack               the               capacity               to               translate               its               growth               into               cash.

This               may               cause               liquidity               problems               in               the               short               term.
               -               To               be               innovative,               a               company               should               generate               positive               cash               flow               from               investing               activities.
               -               Investors               should               compare               current               debt               financing               with               past               periods               in               financing               activities               to               evaluate               if               the               company               has               effectively               managed               its               debt               over               the               years.
               Sources:
               http://www.investopedia.com/terms/a/accrualaccounting.asp
               http://www.investopedia.com/terms/o/operatingcashflow.asp
               http://www.investopedia.com/terms/c/cashflowfinvestingactivities.asp
               http://www.investopedia.com/terms/c/cashflowfromfinancing.asp
               http://www.googobits.com/articles/932-how-to-prepare-a-cash-flow-statement.html






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