In a two- to three-page paper (not including the title and reference pages), explain the purpose of a cash flow statement and how it reflects the firm’s financial status. Include important points that an analyst would use in assessing the financial condition of the company. Also, analyze Ford Motor Company’s cash flow from its Ford Motor Company 2012 Annual Report. (https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_F_2012.pdf)
Your paper must be formatted according to APA style and it must include citations and references for the text and at least two scholarly sources.
Grading Rubric:
Total Possible Score: 8.00
Explains the Purpose of a Cash Flow Statement
Total: 3.00
Distinguished – Accurately and thoroughly explains the purpose of a cash flow statement and how it reflects the firm’s financial status, including the important points that an analyst would use in assessing the financial condition of a company.
Proficient – Explains the purpose of a cash flow statement and how it reflects the firm’s financial status, including the important points that an analyst would use in assessing the financial condition of a company. The explanation has few inaccuracies or minor details are missing.
Basic – Partially explains the purpose of a cash flow statement and how it reflects the firm’s financial status, somewhat including the important points that an analyst would use in assessing the financial condition of a company. The explanation has several inaccuracies and/or relevant details are missing.
Below Expectations – Attempts to explain the purpose of a cash flow statement and how it reflects the firm’s financial status; however, does not include the important points that an analyst would use in assessing the financial condition of a company the explanation has many inaccuracies and/or significant details are missing.
Non-Performance – The explanation of the purpose of a cash flow statement is either nonexistent or lacks the components described in the assignment instructions.
Analyzes Ford Motor Company’s Cash Flow From Its 2012 Annual Report
Total: 4.00
Distinguished – Accurately and thoroughly analyzes Ford’s cash flow statement from its 2012 annual report, including all inflows and outflows.
Proficient – Analyzes Ford’s cash flow statement from its 2012 annual report, including all inflows and outflows. The analysis has few inaccuracies or minor details are missing.
Basic – Analyzes Ford’s cash flow statement from its 2012 annual report, including all inflows and outflows. The analysis has several inaccuracies and/or relevant details are missing.
Below Expectations – Attempts to analyze Ford’s cash flow statement from its 2012 annual report, including all inflows and outflows; however, the analysis has many inaccuracies and/or significant details are missing.
Non-Performance – The analysis of Ford’s cash flow is either nonexistent or lacks the components described in the assignment instructions.
Written Communication: Control of Syntax and Mechanics
Total: 0.25
Distinguished – Displays meticulous comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains no errors and is very easy to understand.
Proficient – Displays comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains only a few minor errors and is mostly easy to understand.
Basic – Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written work contains a few errors which may slightly distract the reader.
Below Expectations – Fails to display basic comprehension of syntax or mechanics, such as spelling and grammar. Written work contains major errors which distract the reader.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: APA Formatting
Total: 0.25
Distinguished – Accurately uses APA formatting consistently throughout the paper, title page, and reference page.
Proficient – Exhibits APA formatting throughout the paper. However, layout contains a few minor errors.
Basic – Exhibits limited knowledge of APA formatting throughout the paper. However, layout does not meet all APA requirements.
Below Expectations – Fails to exhibit basic knowledge of APA formatting. There are frequent errors, making the layout difficult to distinguish as APA.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Page Requirement
Total: 0.25
Distinguished – The length of the paper is equivalent to the required number of correctly formatted pages.
Proficient – The length of the paper is nearly equivalent to the required number of correctly formatted pages.
Basic – The length of the paper is equivalent to at least three quarters of the required number of correctly formatted pages.
Below Expectations – The length of the paper is equivalent to at least one half of the required number of correctly formatted pages.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Resource Requirement
Total: 0.25
Distinguished – Uses more than the required number of scholarly sources, providing compelling evidence to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Proficient – Uses the required number of scholarly sources to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Basic – Uses less than the required number of sources to support ideas. Some sources may not be scholarly. Most sources on the reference page are used within the body of the assignment. Citations may not be formatted correctly.
Below Expectations – Uses an inadequate number of sources that provide little or no support for ideas. Sources used may not be scholarly. Most sources on the reference page are not used within the body of the assignment. Citations are not formatted correctly.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Weekly Lecture:
Elements of a Statement of Cash Flow
A cash flow statement indicates flow of cash into and out of a business organization. In most cases, an organization’s cash in hand is lower than operations, although both have to be equal and this is attributed by outstanding bills still not paid by customers. A cash flow statement helps managers:
a. Establish the changes in a company’s cash at hand from the activities undertaken over a given reporting period.
b. Determine the company’s sources and uses of cash.
c. Understand operating results throughout a given operating period.
There are three types of financial activities detailed in a cash flow statement, which include operating activities, investing activities, and financial activities. A cash flow statement can take two forms: direct format and indirect format.
1. Direct method: categorizes main classes of cash receipts and cash payment differently.
2. Indirect method: focuses differentiating net income and net cash flow from a company’s operations. This is the commonly used method due to its ability to offer a limited amount of information.
A cash flow statement can be compiled with the company’s balance sheets and income statements of two years/accounting periods (Heakal, 2010). In calculation of statement of cash flow, line items in which cash was used are adjusted from the net income. The cash flow statement includes line items found in the balance sheets. Net income line items from the income statement are also needed, in addition to income tax expenses and depreciation expenses (Heakal, 2010). A cash inflow on a cash flow statement is positive while cash outflow is negative. The operating activities include an adjustment part and the remainder part that indicates the necessary changes needed to reflect cash on hand after changes in the balance sheet items. Other line items in cash flow statements whose change is of significant influence include inventories, accounts payable and accrued liabilities. Adjustments, on the other hand, refer to cash flow changes based on components of the income statement that do not need cash. These include amortization, depreciation or deferred income taxes. Cash in a company can be spent in various activities, among them investing activities to help the company grow. These activities include:
a. Mergers or acquisitions
b. Major improvements to existing buildings
c. Major upgrades to existing factories and equipment
d. Purchase or sale of marketable securities
e. Purchase or sale of property, plant, and equipment
The operating activities’ bottom line indicates how much cash a certain company has spent or generated from its operating activities. The other side of the cash flow statement represents the financing activities that need money to fund operations. To gain this money, a company can raise it from outside sources if it lacks enough internally. The bottom line of financing activities shows the net cash used to finance the business.
Reference: Heakal, R. (2010). What is a cash flow statement? Forbes. Retrieved from http://www.forbes.com/2010/05/27/cash-flow-statement-personal-finance-securities-analysis.html
