Cash Flow Statement Preparation

What You Will Learn

• 1 Learn the foundational purpose and structure of the cash flow statement and how it differs from the income statement and balance sheet.
• 2 Understand the three sections of the cash flow statement — operating, investing, and financing activities — and what each reveals about business health.
• 3 Apply the indirect method of preparing the operating activities section by adjusting net income for non-cash items and working capital changes.
• 4 Apply the direct method of preparing the operating activities section by reporting gross cash receipts and payments from operations.
• 5 Analyze investing activities to identify how a business acquires, disposes of, and manages its long-term assets.
• 6 Analyze financing activities to understand how a business raises capital, repays debt, and distributes returns to stakeholders.
• 7 Understand the reconciliation process and how to ensure the cash flow statement ties to the balance sheet opening and closing cash balances.
• 8 Develop skills in identifying common errors, adjustments, and red flags when reviewing or auditing a cash flow statement.
• 9 Build a complete cash flow statement from source documents including trial balances, comparative balance sheets, and income statements.
• 10 Implement cash flow analysis techniques to evaluate liquidity, solvency, and the quality of earnings for strategic decision-making.