FINANCIAL
STATEMENT ANALYSIS 1-27
Increase
(Decrease) in
cash and
marketable
securities
Finally, we subtract the total value of the
C
OMMON
and
P
REFERRED
D
IVIDENDS
(from the Income Statement) to arrive at the net
I
NCREASE
or
D
ECREASE
in
C
ASH
and
M
ARKETABLE
S
ECURITIES
.
$8.6 million - $7.7 million = $0.9 million
Our check to make sure that the calculation is correct is to calculate the
net change in the Balance Sheet accounts for
CASH
and
MARKETABLE
SECURITIES
.
($5.7 million + $6.3 million) - ($6.2 million + $4.9 million) = $0.9 million
For our XYZ Corporation, we have calculated the sources and uses of
cash correctly.
Summary
The Cash Flow Statement is a summary of the sources and uses of cash
for a specified period of time. Different formats for presenting the
information have other names, such as "Statement of Changes in Financial
Position." Regardless of the format, the basic rules for calculating cash
flow remain the same. Any basic finance or accounting text will give
additional information on these other formats. The unit of the bank in
which you work will have specific instructions on the format you should
use for your analysis.
You have completed the "Cash Flow Statement" section of Financial Statement Analysis.
Please complete Progress Check 1.3, then continue to the next section that covers "Financial
Ratios." If you answer any questions incorrectly, please review the appropriate text.