From the course: Reading Corporate Financial Statements

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The impact of financing activities on the cash flow statement

The impact of financing activities on the cash flow statement

From the course: Reading Corporate Financial Statements

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The impact of financing activities on the cash flow statement

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- When we look at our cash account, and see the beginning balance of $1 million is now $1.2 million, that's great, but we have to ask why. In this chapter, we found that $30,000 net cash was provided by operating activities, and $15,000 net cash was used by investing decisions. Combined, we've accounted for only $15,000 of the $200,000 increase in cash over the period. Clearly, we haven't thought of everything or we would have accounted for the full $200,000 difference. Very few of us, as individuals or businesses, can function financially without a little help from our friends, the financiers in our lives. Whether it's a loan from grandma or a financial institution, our dreams are often held up with the financial help of others. So, maybe the extra $200,000 in our cash account is there in part because of a loan with the bank. Fortunately, the statement of cash flows gives us a structure to explain changes in our cash…

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