CFO or CFF

Wow, those were the two shortest, most succint answers I've seen on this board.
 
CFI...but the gain or loss on a sale is neither in the sense that you woudl not add or subtract it to arrive at CFI...you only need to add back or subtract from NI to arrive at CFO. The gain or loss is accounted for by the difference between the BV and Sale price.
 
Willy, your right, but only when your doing the indirect method. Not the direct method.
 
I am confused about "profit from sale of equipment" . the notes says purchases of property, plant and equipment is part of CFI, and cash inputs into the manufacturing or retail process is part of CFO.
 
Iwang, when you are calculating CFO using indirect method, you start off with net income. The profit or loss from sale of equipment/property is already encountered in net income. And you also use the total sale price for CFI.

So, to avoid double counting, you must add back the loss, or subtract the gain from N.I when calculating for CFO using indirect method.

Hope that makes sense.



Edited 1 time(s). Last edit at Thursday, October 12, 2006 at 12:57PM by CFAHouston.
 
"Cash inputs into the manufacturing...process"

Not sure what you mean, but to me, a cash input into a manfacturing process would be like the cash I paid to buy lemons for my lemonade factory.

Anthing to do with the purchase/sale of hard assets hits CFI (except for the taxes related to such transactions, which hit CFO).
 
Dr. Feelgood Wrote:
-------------------------------------------------------
> "Cash inputs into the manufacturing...process"
>
> Not sure what you mean, but to me, a cash input
> into a manfacturing process would be like the cash
> I paid to buy lemons for my lemonade factory.
>
> Anthing to do with the purchase/sale of hard
> assets hits CFI (except for the taxes related to
> such transactions, which hit CFO).


Does it mean that "sales of property" in CFI is net of taxes?
 
They provide you with a number net of tax, yes.

Doc, I think he meant cash inputs from business operations - sales/COGS/expenses and such.
 
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