English Final Task

Cah Flow Statement Analysis

Cash Return On Current Liabilities Ratio Method

A.      Cash Flow Statement

Cash Flow Statement is financial report that records amount of cash and cash equivalent which entering into company’s and leaving from a company’s. This report a mandatory part of a company’s financial reports since 1987 and completing Balance sheet, Capital Statement and Income Statement.

The Amount of cash that enter in Company called Cash Inflows, and the amount of cash that going out from company called Cash Outflows

Cash flow Statement is partitioned into three segments, namely :

1.      Cash flow resulting from operating activity

2.    Cash flow resulting from investing activity

3.    Cash flow resulting from financing activity

a.       Cash Flow From Operating Activity

Cash inflows and Outflows resulting from day-to-day business operations, includingthe collection of cash from sales and payment of expenses. Example:

·      Receipts from the sale ofgoods or service

·      Interest received on loans

·      Payment to suppliers for goods and service

·      Payment to employees

·      Buying merchandise item

b.      Cash Flow From Investing Activity

The investing activities encompass the acquisition and desposition of asset in transactions that are separate from the central activity of the reporting company like sell or buy non-current assets. Example buy or sell Fixed Asset.

c.       Cash Flow From Financing Activity

Financing Activity related primarily to liabilities and shareholders equity in transactions that are separate from central, day-to-day activities of the company. Cash inflows from financing activities usually include issuing capital stock or incurring liabilities such as bonds or notes payable. Outflows are created by the distribution of devidens, the aquisition of treasury stocks, the payment of noncurrent liabilities, and the like.

As we know the financial statement just show to us the amount of financial statement it self, so the Stockholders or financial user not understan what the meaning of amount in Financial Statement, it’s why we need to analysis the the financial statement specially Cash Flow Statement. The Adventages of analysis Cash flow statement are:

1.    The  shareholders can know where cash and cash equivalent coming from and how its being spend,

2.    Provide information on a company’s liquidity and solvency and it’s ability to change cash flows in the future circumstances,

3.    Provide additional information for evaluating changes in assets, liabilities and equity.

Many Method we can use for analysis financial Statment those are:

1.      Horizontal analysis

2.      Vertical analysis

3.      Cross-section

4.      Ratio analysis

a.       Horizontal analysis is a prosedure infundamental analysis in which company’s financial statementsover a certain period of time. The analysis will use his or her discretion when choosing a particular timeline, however, the decision is often based of the investing time horison under consideration

b.      Vertical Analysis

Vertical Analysis is a method of financial statement anaylis inn which each entry for each of the three major categories of accounts (asset, liabilies and equities) in balance sheets is represented as a proportion of the total account. The main adventages of vertical analysis is that the balance sheets of businesses of all sizes can easly be compared. It also makes it easy to see relative annual changes whitin on business.

c.       Cross- section

Cross- section is a type of analysis investor, analysis or portofolio manager may conduct on company in relation to that company’s industry or industry peers. The analysis compares one company against the industry it operates whitin, or directly against certain competitors whitin the same industry, in an attempt to discover the best of the breed.

d.      Financial Ratio Analysis

A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. The kinds of financial Ratio Analysis are:

·      Cash Return On Current Liabilities Ratio

·      Cash Return On Total Liabilities Ratio

·      Cash Return On Total Assets Ratio

·         The  Advantage Analysis of Cash Flow Statement For Cash Generating Capability Assessment

·         Statement of cash flows can enhance the ability to evaluate the performance and financial health of the company

·         The  shareholders can know where is cash and cash equivalent coming from and how its being spend 

Cash Return On Current Liabilities Ratio (CROCL)

Cash Return on Current Liabilities Ratio (CROCL) is  ratio that we use for  measuring how much cash flow operation which is result by company for funding all the company’s Liabilities,

	CROCL = Net Cash Flow from Operating Activity/Current Liabilities

 

PT BHAKTI INVESTAMA

YEAR	CF FROM OPERATING ACTIVITY	Current Liabilities
2011	744.652	3.692.306
2012	813.895	4.405.583

 * 2011 = 744.652 / 3692306 = 0.20 or 20%

* 2012 = 813.895 / 4.405.583 = 0.18 or 18%