Question

Below is a firm's cash flow statement. What are its operating cash flows, financing cash flows and operating + investing cash flows?

Net loss	$ (2,221)
Depreciation and amortization	375
Impairment charges	427
Merchandise inventories	1,213
Merchandise payables	(526)
Other operating assets	(649)
Net cash used in operating activities	(1,381)
Proceeds from sales of property and investments	386
Purchases of property and equipment	(142)
Net cash provided by investing activities	244
Proceeds from debt issuances	1,962
Increase (decrease) in short-term borrowings	(797)
Proceeds from sale-leaseback financing	71
Debt issuance costs	(51)
Net cash provided by (used in) financing activities	1,185
NET INCREASE IN CASH AND CASH EQUIVALENTS	48
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	238
CASH AND CASH EQUIVALENTS, END OF PERIOD	286

OCF + ICF = (1,137)

OCF = (1,381)

FCF = 1,185

Answer 1

Operating cash flows are the cash generated from day to day operating activities of the business. This begins with adjusting the net income for non cash expenses such as depreciation and impairment charges and then adding increase in current liabilities and decrease in current assets. Decrease in current liabilities is deducted and so is increase in current assets.

By this the OPerating cash flows are -1381

Net cash provided by (used in) financing activities is 1185. This refers to all cash flows relating to issue of debt and equity such as payments of interest/ dividend etc.

OCF + ICF = -1381+244 = -1137