Which is an example of a cash flow from an operating activity? (2024)

Which is an example of a cash flow from an operating activity?

Examples of the direct method of cash flows from operating activities include: Salaries paid out to employees. Cash paid to vendors and suppliers. Cash collected from customers.

Which is an example of a cash flow from an operating activity quizlet?

Which is an example of a cash flow from an operating activity? Answer D: Payment of cash to lenders for interest and receipt of interest are both operating activities.

What is operating cash flow with example?

What is operating cash flow (OCF)? Operating cash flow represents the cash a company generates from normal business operations. It includes cash inflows and outflows related to a company's main business activities, including selling and purchasing inventory, providing services and paying salaries.

What is the cash flow from operating activities method?

Here's the formula to calculate a company's net CFO using the indirect method: Net cash from operating activities = Net income +/− depreciation and amortization +/− Change in working capital.

What are operating activities examples?

Operating activities examples include:
  • Receipt of cash from sales.
  • Collection of accounts receivable.
  • Receipt or payment of interest.
  • Payment for materials and supplies.
  • Payment of salaries.
  • Payment of principal and interest for operating leases. ...
  • Payment of taxes, fines, and license costs.
Jan 22, 2024

Which of the following is not an example of cash flows from operating activities?

Cash inflows from the sale of property, plant, and equipment is not a typical cash flow under operating activities.

Which of the following is not an example of operating cash flow?

Purchase of equipment for cash is not an operating cash flow.

What is operating cash flow quizlet?

A firm's operating cash flow (OCF) is defined as. EBIT times one minus the tax rate plus depreciation. Cash flows directly related to the production and sale of the firm's products and services are called: Operating Cash Flows.

What is an example of operating cash flow in a restaurant business?

Cash inflows include cash received from customers or other financing sources - for example, both food/beverage sales and small business loans are considered cash inflows. Cash outflows include cash spent on operating costs like your rent, wages, utilities, food and other supplies.

What is the operating cash flow to operating profit?

Operating cash flow FAQ

Operating profit includes depreciation and amortization, but excludes interest and taxes. Cash flow from operations does the opposite: it excludes depreciation and amortization because they are non-cash expenses, and it includes interest and taxes because they are cash expenses.

What is an operating activity quizlet?

Operating Activity. An activity that directly affects an organization's cash inflows and outflows, and determine its net income (aka costs and expenses)

What are the 3 types of cash flows?

The cash flow statement is the least important financial statement but is also the most transparent. The cash flow statement is broken down into three categories: Operating activities, investment activities, and financing activities.

Where do you find operating cash flow?

Operating cash flow is the first section depicted on a cash flow statement, which also includes cash from investing and financing activities. There are two methods for depicting operating cash flow on a cash flow statement—the indirect method and the direct method.

What is not an operating cash flow?

Examples of non-operating cash flow can include taking out a loan, issuing new stock, and a self-tender defense, among many others. Items listed under non-operating cash flow are usually non-recurring.

Which of the following is not a cash flow in flow?

Concepts: In general, the term 'cash flow' refers to the flow of cash in and out of the business. They are classified into three types of activities depending on the nature of the transactions. ∴ Estimating and costing activities are not included in Cash flow.

Which of the following would not be considered an operating activity?

Answer and Explanation:

Payment of dividends would not be classified as an operating activity.

What is the difference between operating cash flow and cash flow?

Operating cash flow measures cash generated by a company's business operations. Free cash flow is the cash that a company generates from its business operations after subtracting capital expenditures. Operating cash flow tells investors whether a company has enough cash flow to pay its bills.

What do operating cash flows affect quizlet?

-operating cash flows cause changes in current assets and current liabilities, investing cash flows affect noncurrent assets, and financing cash flows affect noncurrent liabilities or stockholders' equity accounts.

What is the formula for operating cash flow quizlet?

Operating cash flow is EBIT + Depreciation - tax payments. Additions to net working capital are subtracted from operating cash flow to compute cash flow to investors in the firm.

Which of the following is an example of cash in flow for a business?

Examples of cash inflows are - Cash proceeds from issuing shares or other similar instruments, cash receipts from disposal of fixed assets including intangibles, cash receipts from sale of goods and rendering services.

What is one example of when cash flow can be a problem to a business?

Expensive borrowing. Debt payments can cause cash flow problems when a business can't afford its financing. Paying off business loans and high-interest credit cards can take much of a business's revenue.

Which of the following would be included in the cash flow from operating activities section of the statement of cash flows?

Inventories, accounts receivable (AR), tax assets, accrued revenue, and deferred revenue are common examples of assets for which a change in value is reflected in cash flow from operating activities.

Which of the following activities is an example of a financing activity?

Financing activities include: Issuing and repurchasing equity. Borrowing and repaying short-term and long-term debt.

Which of the following activities would be included on the statement of cash flows?

Answer: Cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction. Each of these three classifications is defined as follows. Operating activities. include cash activities related to net income.

What is an example of cash flow from operating activities indirect method?

Cash flow from operating activities = Net income + depreciation expense + decrease in accounts receivables – increase in inventory + increase in accounts payable. Net income, depreciation expense, decrease in AR, and increase in AP are cash inflows. Hence they need to be added.

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