Purchase Solution

Statement of Cash Flows: Time for change

Not what you're looking for?

Ask Custom Question

See attached file.

As contained in the Week Four electronic reserve readings article readings, this article, Broome, O. W. (2004, March/April). Statement of cash flows: Time for change! Financial Analysts Journal, 60(2), 16. , describes the current SFAS No. 95 requirements for the statement of cash flows, cites recent cases of abuse and disinformation involving the statement, and makes significant recommendations for improving the statement. Based on the comments in the article do you think the three sections of the statement of cash flows provide enough information for the reader? Of the three which provides the most information or is this an 'it depends' answer?

Attachments
Purchase this Solution
Solution Summary

Your tutorial is 433 words and agrees with Dr. O. Whitfield Broome that the cash flow statement could be improved. One section is cited as more important with reasons given.

Solution Preview

No, the cash flow statement does not contain enough information. Broome suggests two main improvements to the cash flow statement. First, that the operating cash flows are reported using the direct method and that the reconciliation between net income and operating cash flows is made more understandable by separating them into four basic categories: inflows not yet reported in earnings, revenues not yet collected, outflows not yet reported in earnings and expenses not yet paid for. I believe these would greatly enhance the usefulness of the cash flow report.

Broome does not take issues with the three categories of operating, investing or financing, although he cites classification abuses. For ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

View More Free Quizzes
Related BrainMass Solutions

  • Statement of Cash Flows

    112472 Statement of Cash Flows DQ. 1 As an investor, does one section of the statement of cash flows interest you more than other sections? Why or why not? DQ. 2 Does your answer to DQ 1 change if you are management? A creditor?

  • Cash flow statement-direct & indirect method

    250091 Cash Flows Statement Prepare statement of cash flows (indirect method) using balance sheet data. Presented below are comparative balance sheets for Millco, Inc., at January 31 and February 28, 2004.

  • The Lazy Mower Project

    321628 Questions on the case of The Lazy Mower: Is It Really Worth It? Refer to the file attached for the second case of "The Lazy Mower". 1. Prepare the performa statement showing the annual cash flows resulting from the Lazy Mower project?

  • Accounting Questions - True & False

    (Circle one) For a profitable mature company, is the cash flow from operations usually (positive or negative)? 8. A share repurchase would show up where in the statement of cash flows? (Operating, Financing, or Investing) 9.

  • Statement of Cash Flows.

    321324 Statement of Cash Flows. Attached is the Statement of Cash Flows I am working with, which is for Harley Davidson. Assistance is need with the financing activities.

  • Analysis of Cash Flow statement for two companies

    393302 Analysis of Cash Flow statement for two companies in the same industry Select 2 companies in the same industry. Use the Internet to find the current statement of cash flow for both companies and answer the following: â?

  • Evaluate the elements of a typical income statement

    Recommend a one change that would make income statements, balance sheets or statement of cash flows more useful.

  • Four Basic financial statements

    Whitfield, Statement of Cash Flows: Time for Change!

  • The purposes of the Statement of Cash Flows

    28532 The purposes of the Statement of Cash Flows What is the statement of cash flow designed to fulfill? To predict future cash flows ~ Cash not reported income, pays the bills.

View More Related Solutions