 |
Accounting & Bookkeeping & Small Business Forum
Accounting, Bookkeeping, Marketing, and Small Business Resource
|
| View previous topic :: View next topic |
| Author |
Message |
summerice
Joined: 25 Aug 2008
Posts: 1
|
| Posted: Tue Aug 26, 2008 2:36 pm Post subject: a question about cash flow from assets |
|
|
:) Hi, I got a problem with the formula for the cash flow from assets.
It says that the cash flow from assets = operating cash flow -net capital spending-addition to net working capital.
However, the change in cash (and cash equivalent) is also a part of the change in net working capital. How can we deduct the change in cash from the operating cash flow? Operating cash flow is like the cash we earn from our business, but now we are deducting the addition to cash from it? I feel very confused.
Could anyone help me with this? Thanks! |
|
| Back to top |
|
rashidjaved11
Joined: 26 Aug 2008
Posts: 1
|
| Posted: Wed Aug 27, 2008 5:03 am Post subject: |
|
|
hello,
You do not need to use any such formula simply keep in mid that every cash inflow or out flow from sale of assets is geneally treated as cas flow from investing activities. If you are selling an asset at a price more than its book value and you are using indirect method of cash flow preparation then you have to deduct the profit from operating activities. in case of loss you have to add it to the operating activities. For an good understanding of the concept go to accountingformanagement dot com
Thanx |
|
| Back to top |
|
| |
|