CASHFLOW STATEMENT BUSINESS VOCABULARY IN USE (ADVANCED)

 

BUSINESS VOCABULARY IN USE (ADVANCED) 37. CASHFLOW STATEMENT

 

A Cash inflows and outflows The cashflow statement shows money actually coming into and going out of a company in a particular period: cash inflows and outflows. B Types of cashflow Not cashflow from operations is the money generated by the sales of the company’s goods or services, minus the money spent on supplies, staff salaries, etc. in period. Not cahsflow from investment activities is the result  of: • purchases of securities (bonds, shares, etch.) in other companies. • money received from sales of securities in other companies. • loans made to borrowers. • loans repaid and loan interest paid by borrowers. Net cashflow from financing activities is the result of: • money received through short-term borrowing. • money repaid in short-term borrowing. • money received through issuing new shares in the company Adding and subtracting the figures above, the company calculates its net cash position at the end of the year. Investors check the cashflow statement to see how the company is obtaining and using its cash – how much it made from its operations, how much it has raised through new share issues, etc. Note: ‘Cashflow’ can also be spelled with a hyphen and as two words. EXERCISES 37.1 Complete the table for a UK company, using the information in A and B opposite, and the facts from the following presentation. Last year, SBC had a net cashflow from its operations of £550,000. It bought a new office building for £400,000 and new equipment for £90,000. The company lent £35,000 to buy shares to one of its directors so she could buy a new car. SBC paid £50,000 to buy shares in Company A and obtained £30,000 for shares that it sold in Company B. It received interest of £5,000 on a loan that it had made to another director and sold its old office building for £250,000. SBC obtained a bank loan for £220,000 that it will have to repay next year. It paid out £53,000 in dividends to shareholders it raised £660,000 by issuing new bonds and £800,000 by issuing new share capital. It also repaid a loan of £180,000 that it obtained last year.

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