Cash and cash equivalents- cash comprises cash in hand and demand deposits with banks, cash equivalents means short-term investments
Cash Flow Statement
This category is aimed at providing all resources on cash flow statements. A cash flow statement is simply an analytical statement that exhibits the flow of incoming and outgoing cash and cash equivalent. It assesses the ability of the enterprise to generate cash and utilize cash. Cash Flow Statement is one of the tools for assessing the liquidity and solvency of the enterprise. A cash flow statement is a required financial statement under US GAAP and IFRS whenever a company presents its results of operations for a period. A cash Flow Statement is considered to be a summarized statement showing sources of Cash Inflows and the application of cash outflows of an enterprise during a particular period of time. It is prepared on the basis of the published data as disclosed by the Financial statements of two different financial periods. Cash Flows’ implies movement of cash in and out due to some non-cash items. Receipt of cash from a non-cash item is termed as cash inflow while cash payment in respect of such items as cash outflow. For example, purchase of machinery by paying cash is cash outflow while sale proceeds received from sale of machinery is cash inflow. Other examples of cash flows include collection of cash from trade receivables, payment to trade payables, payment to employees, receipt of dividend, interest payments, etc. Cash management includes the investment of excess cash in cash equivalents. Hence, the purchase of marketable securities or short-term investment which constitutes cash equivalents is not considered while preparing a cash flow statement.