Cash Flows From Operating Activities

Cash Collection From Customer - To Get the Cash collection i simply solve
the revenue, Account Receivable and other income.

Money in - Add it
Money out - Subtract it

1, 762, 050 ( Revenue ) - 316,000 ( Account Receivable ) = 1,446,050 ( Total ) +

10,000 ( Other Income) = 1,456,050 ( Cash Collection From customer )

Revenue - This is from the Income Statement and it is positive because this is the total
of your cash received from the products you sold.

- To get the revenue I solve the sales, sales return and sales discount.

Net sales = Revenue

1,832,450.00 ( Sales ) - 20,000.00 ( Sales Return ) = 1, 812,450 - 50, 400.00 (

Sales Discount) = 1, 762, 050 ( Revenue )

Change in Account Receivable - To get the account receivable i go to the balance

sheet then i subtract the account receivable because less cash. ( you haven't received
any cash yet. when it is decrease that’s the time you receive the money. )

Increase receivable - The cash is you didn’t receive yet ( - )

Decrease Receivable - The cash is already receive (+)

363,000.00 ( 2016 ) - 47,000 ( 2015 ) = -316,000 ( Account Receivable )

Other Income(Rent income) - This is from the Income Statement and you will add this because
it’s also an increase in cash.

- To get the other income i go to income statement and get the other revenue and
expenses which is the rent income in the amount of 10,000
 Cash Paid for Merchandise

Cash Paid for Merchandise - You have to subtract this because this is Cash Paid
so it means the cash decreased.

- To get this, compute the COGS, change in inventory, change in account

payable.

868,000 ( COGS ) - 10,000 ( Change in inventory ) = 858,000 ( Total ) + 98,000

( Accounts Payable ) = - 956,000 ( Cash Paid Merchandise )

Note : More expenses or less cash ( + )

More Cash or Less expense ( - )

COGS - To get the cogs 868,000 i must go to the income statement where the Cost of
goods sold (COGS) is located

Take note: When we have parenthese in the income statement it doesn’t mean that
you will put a negative in the cash flow automatically. Because in the income statement
we wanna know the total or the net income because we receive the expenses on the
income so that its money is out.

Change in inventory - To get the inventory i got to the balance sheet then i subtract
the inventory because they already have the product. When they already have a
product, they have a high amount of cash when they sell it.

Increase inventory - The business buys more product so less cash since they buy a
product ( + )
Decrease inventory - The business have a more sale so more money to receive ( - )

340,000 ( 2016 ) - 350,000 (2015 ) = - 10,000 ( Change in inventory )

Change in Accounts Payable - accounts payable is 98,000 since the payable decrease.
When the payable of the company decreases since it's already paid so less cash. When
the payable increases , more cash so subtract it. (This is from the Balance Sheet, it’s still
positive because this is just a sub category so you will put the sign after you computed it all.)

Increase payable - The liabilities in the company are increased so more cash (-)
Decrease payable - The money are already paid, so the cash of the business are
decrease (+)

Cash Paid for operating Activities

Cash Paid for operating Activities - This is the total of all the Expenses below.
You have to subtract this because this is Cash Paid so it means the cash decreased.

- To get the - 252,000 i get the amount of marketing, utilities, salaries and rent
expense after that i compute those amount.

50,000 ( Marketing Expense ) + 12,000 ( Utilities Expense ) + 130,000 ( Salaries Expense )

+ 60,000 ( Rent Expense ) = - 252,000 ( Cash Paid for Operating Activities )

Marketing Expense, Utilities Expense, Salaries Expense, Rent Expense

- It’s still positive because this is just a sub category so you will put the sign after
you computed it all.

- Since it’s a Direct Cash Flow, you will not put the non-cash expense so you can
see that the Supplies Expense, Depreciation Expense, and Insurance Expense are
not included.

We only count the operating the business so that i come up with the marketing, utilities,
salaries and rent expenses.

- Since it is a cash paid its automatically negative (Explanation why negative lagi
ang cash paid topic)
supplies , depreciation and insurance expenses are not included because it's non cash
expenses because we consider cash flow is the money.

Supplies expense is a non cash asset because once you consume the supplies there's no
cash so technically no cash is involved. In supplies expense we consume and use the
existing supplies not the cash.

Ex. When you buy a supply there's a cash involvement once you consume it it's
technically no cash involved.

Depreciation Expense - The value of the assets decreases as time goes on.

Insurance expense - you use prepaid insurance ahead of time so no cash involved.

Ex. When you buy prepaid insurance it is an asset once you consume it it’s insurance
expense so no cash involved.

No cash paid in income taxes, interest and dividend received because there's no
transaction because we can assume that the business is starting palang.

No income taxes because the business didn’t reach the standard profit .

Ex. The standard taxes 250,000 if the business didn’t reach that kind of profit the
business is not eligible to give taxes.

Net Inflow - It is Inflow because the total when I computed the Cash Collections
from Customers, Cash Paid in Merchandise, and Cash Paid for Operating Activities
is POSITIVE, so it means the cash increased.

- To get it add the topic which is the Cash collection from customers, Cash Paid for
Merchandise and Cash Paid Operating Activities.
1, 456,050 ( Cash collection from Customer ) - 956,200 ( Cash Paid Merchandise ) =
499,850 ( Total ) - 252,000 ( Cash Paid Operating Activities ) = 247,850 (Net Inflow )

Net Inflow is have a positive results

Outflow is have negative result

CASH FLOWS FROM INVESTING ACTIVITIES

CASH PAID FOR LONG TERM ASSETS - For long term assets what we need to do is to
go to the balance sheet and find Property, Plant, and Equipment, Since we only have
equipment first we subtract 2016 to 2015 due to the Equipment increasing throughout
the year
350,000 (2016) - 50,000 (2015) = -300,000 outflow so cash decreases
- The Equipment increased so it means the cash decreased because you paid
for it.

-When the same amount in 2015 and 2016 means the business doesn't buy or sell that’s
why it is zero.

Increase they bought something the additional assets but less cash( cash paid so
NEGATIVE)
Decrease because the asset was sold so more cash less assets. (Cash receives so
Positive)

Note: Once you Sold your assets it is on the cash receive same rules for cash collection.
Once you bought assets it is on cash paid for long term assets so same rules for cash
paid for merchandise.

- The company does not pay for investments nor received payment from
the sale of long-term assets or insurance therefore it is valued as 0.00

Net Outflow from Investing

> It is Outflow because the cash decreased.
 Cash flow from financing activities

- The company does not have Cash paid for reduction of bonds or long term
debt, Cash received on the issuance of bonds or long term debts, Cash
received on the issuance of shares, Cash paid for the redemption of shares,
Cash paid for dividends, Cash paid/received on short term debts there for
all of them are valued as zero and the total NetFlow/outflow from financing
is also zero

Total Cash Flow

> This is the total I came up with after subtracting the Net Outflow from the Net
Inflow.
> It is negative so it means there is more Outflow of Cash than Inflow.

NOTES / MEANING :

Revenue - the total amount of cash a business receives from customers as payment for
its products or services.
Sales - The money or the profit that the business gains out of selling products.
Sales Return - It is a product that the customer returns to the seller. ( less cash because
of the product return)
Sales Discount- It is a discount that the seller gives to their customer. ( less cash because
of the discount so that its negative )
Account Receivable - The money that you will receive from the customer.
Other Income - It is another income of the company.

Cost of goods sold - It is a product that you already sold to the customer.
Change in inventory - represents the product that the business buys to sell it at a higher
price.
Accounts Payable -