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Cash Flow from Operations (Statement of Cash Flows) financial cash flow



This video demonstrates how to calculate Cash Flow from Operations (aka Operating Cash Flow) using the Indirect Method on the Statement of Cash Flows. The video uses a comprehensive example to show how Cash Flow from Operations is computed and explains how Cash Flow from Operations is different from Cash Flow from Investing and Cash Flow from Financing.

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Cash Flow from Operations (Statement of Cash Flows)

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Cash Flow from Operations (Statement of Cash Flows)
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36 thoughts on “Cash Flow from Operations (Statement of Cash Flows) financial cash flow”

  1. These videos have been greatly helpful this semester. My Accounting textbook hardly explains how these equations work out, so seeing examples of these problems has been super beneficial. Thank you so much.

  2. @Edspira if we have a loss on the sale of Equipment we add it back to Net Income, would that mean that if we have a Profit from the sale of Equipment that we would deduct it from Net Income ?

  3. Really appreciate the video, might be too detailed a question, but: I know from your prior videos on the balance sheet, accounts receivables closes with a debit balance (increases with a debit), so I was wondering why on the actual SEC filings on the cash flow stmt that IncreaseDecreaseInAccountsReceivable closes with a credit balance, and then we have to play around with the signs to get where we want to be for the cash flow from operations? I'm assuming there's a good reason for it, will continue to look for it.

  4. On Accounts Payable I'm still a little confused about. Are we adding back the the $30 because that's money coming inn as oppose to money that we owe that's going out? and that's why it's not a negative?

  5. How does accounts payable and receivable affect our cash flow statement? I thought they won't be added back into our cash flow because we haven't realised the cash yet from either money coming in from receivables or money going out from payables.

  6. I am having trouble understanding why the increase in A/P would be added to cash instead of subtracted. If the company owes $30 more, shouldn't that be subtracted from the cash? Or is it because the company has the $30 currently because it hasn't been paid yet? Thanks

  7. Very great video!!! I would have deffinitely added the "hand" rule to describe the increase/decrease of the different accounts on the Cash Flow. Hand Rule: So if cash is getting on your hand (receving/getting/putting on hand) then add that to cash (+ on CF), if cash is going away from your hands (leaving/going away/no longer putting in hand) then subtract that to cash (- CF). So for any Assets, think about if you increase an asset (lets say an iPhone aka inventory), then that means you must have PURCHASED that iPhone, so then to get an iPhone cash will LEAVE your hand. Meaning increase in Asset = reduce / subtract cash. That's why increase in Inventory or Accounts Receivable will be subtracted from Cash Flows (opposite will happen if you decrease assets. So what's important here is wether the account is increasing or decreasing). For any liability, if you owe money to someone that means you borrowed cash from them so that cash is getting on your hand. That's why increase of Liabilities (like A/P) will be an increase in Cash (cuz u borrowed the money aka your hand got cash), and if you don't owe them anymore then that's a decrease in Liabilities, which will decrease your cash in hand (cuz u payed them back and the cash left your hand).

  8. Thank you so much for making these videos. When I feel stressed out about my accounting homework I just watch some of these. It makes me feel SO much better. The information provided is informative, practical and accurate. This is such a huge help for my study.

  9. Thank you so much for your excellent video! I have a quick question about inventory. If we think an increase in inventory comes from cash we used to purchase the inventory, so an increase of inventory is considered as a cash used by the entity, how should we think about an decrease in inventory? My understanding is that when there is an decrease of inventory, it is considered cost of goods sold, and cost of goods sold was subtracted from revenue when calculating net income. But cost of goods sold is not real cash flow out, so cost of goods sold should be added back in arriving at cash basis of net income. Is my understanding correct? cash from for inventory increase or decrease makes me confused for a long time. Your explanation makes me feel comfortable. thank you !

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