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Article: Cash flow analysis--going beyond the basics: in a cash flow analysis, following the money--where it comes from, where it goes, and why it does--helps companies better assess their debt capacities and financing needs. By looking at alternative measures of cash flow, bankers can more easily answer these critical questions.(Credit Fundamentals)
- Article from:
- The RMA Journal
- Article date:
- May 1, 2008
- Author:
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Cash flow analysis is an integral part of any company's financial evaluation. A good cash flow analysis asks--and answers--three important questions: Where is the company's money coming from? Where is the money going? And why is it going there?
In a sense, cash flow analysis is too important to be left to the standard cash flow statement, which breaks cash flows into three main measures: cash from operating activities, cash from investing activities, and cash from financing activities. The sum of the measures is the change in cash and equivalents. (1)
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These standard measures of cash flow don't do a very good job of ...