Question

what is the purpose of this statement? how do finacial statements relate to other statements?

Table 2.6. Statement of Cash Flows, Ridgeland Heights Medical Center, Year to Date Ending December 31, 2011 and 2012 (in thousands of dollars) 2012 2011 CASH FLOWS FROM OPERATING ACTIVITES Increase (decrease) in net assets 6,400 4,700 Change in net unrealized gains and losses on investments other than trading (1,000) (2,000) securities Changes in net assets Adjustments to reconcile changes in net assets celebrate Depreciation and amortization ID 11,100 10,500 Net accounts receivable (increase) decrease 1,000 (700) Other current assets (increase) decrease (200) (1,500) Accounts payable and accrued liabilities (decrease) increase 2,000 (1,000) Other long-term liabilities (decrease) increase (100) 200 Third-party settlement (decrease) increase (500) 1,200 Current portion of long-term debt (decrease) tion of long-term debt (decrease) 100 Net cash provided by (used in) operating activities 18,800 11,500 CASH FLOWS FROM INVESTING ACTIVITIES (INCREASE) DECREASE Net investments (500) Other noncurrent assets (200) Capital expenditures (14,600) (6,200) Net cash provided by (used in) investing activities (15,100) (6,400) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of long-term debt - - Payments on long-term debts 13,400) (2,500) Net cash provided by (used in) financing activities 3,400) (2,500) Net increase (decrease) in cash and cash equivalents 300 2,600 Cash and cash equivalents, beginning of year 7,400 4,800 Cash and cash equivalents, end of year 7,700 7,400 Supplemental disclosure of cash flow information--cash paid for interest: Cash paid for interest (net of amount capitalized) was 57,700,000 in 2012 and $7,500,000 in 2011.

Answer 1

The statement shown above is cash flow statement. It is a part of financial statements. It shows the net increase or decrease or change in cash during the reporting period.

Purpose of cash flow statement: Net income is shown in the income statement. There may be the cases when there is huge net income but no or minimum amount of cash available. Or very low net income but high amounts of cash available in the business. Cash flow statement answers such type of questions. A cash flow statement is prepared to know where the cash has gone or from where the cash came from. It is divided into three sections viz. cash flows from operating activities, cash flows from investing activities and cash flows from financing activities. All the receipts and payments of cash fall into one of these categories.

Relation of financial statements: All the financial statements are related to one another in the sense that one financial statement takes inputs from the other. A cash flow statement gives the ending balance of cash which is shown under the current assets section of the balance sheet. On the other hand, a cash flow statement takes inputs like net income, operating expenses etc from the income statement. Net income as shown by the cash flow statement forms part of statement of stockholder's equity which is also shown in the balance sheet.