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How to compile the cash flow statement in accounting statements?

First, the role of the cash flow statement

1, accrual basis and cash basis

Most early accounting practices used cash basis. By the beginning of this century, many small and medium-sized enterprises are still used to accounting according to actual payment. In order to make the profit accounting more reasonable, and the income and expenses can be reasonably matched and apportioned in different periods, accounting theory began to advocate the principle of traceability of income and expenditure, that is, to classify income or loss into the reporting period that led to income or expenditure, rather than into the reporting period that actually received and paid cash. This is the basis of our current accounting-accrual basis. But at the same time, managers, creditors and investors are very concerned about the capital flow of enterprises, because it determines whether enterprises can operate normally and whether creditors and investors can realize their return on capital, especially during the economic downturn and depression.

It took a long time for the cash flow statement to be confirmed by accounting standards. In fact, it is a useful supplement to traditional statements-balance sheet and income statement. The income statement only reflects the operating results of the enterprise in a certain period, and does not reflect the capital flow generated by operating activities; The balance sheet only reflects the financial situation of the enterprise at a certain point in time, and does not explain the reasons for the changes. According to the principle of relativity, the income statement does not distinguish between paid-in expenses and receivable expenses, which cannot truly reflect the actual income of enterprises and is easy to mislead creditors and investors. According to the historical cost principle, the assets recorded in the balance sheet may be far from the actual market value. In fact, the selectivity of accounting methods greatly reduces the credibility of accounting statements.

2. From statement of changes in financial position to cash flow statement

The cash flow statement usually adopts the concept of all funds, that is, the financing and investment activities that do not affect the change of funds are also listed in the table to reflect the whole picture of enterprise activities. The cash flow statement based on working capital is called the statement of changes in financial position, and the cash flow statement based on cash and cash equivalents is called the cash flow statement. Since 1970s, western accounting circles generally require the preparation of statement of changes in financial position, and China's accounting standards for enterprises formulated in 1992 also require enterprises to provide statement of changes in financial position or cash flow statement.

The statement of changes in financial position based on working capital can not fully reflect the operating performance and solvency of enterprises. First of all, liquidity is the balance of current assets after deducting current liabilities, and its scale is affected by its reasonable measurement. In practice, some enterprises list inventory and deferred expenses that can be sold or realized for more than one year as current assets, while some long-term assets that will be sold in the short term are not converted into current assets. At the same time, the accounting methods of assets such as inventory and accounts receivable cannot avoid the difference between book value and actual value. Secondly, using liquidity to measure and analyze the liquidity and solvency of an enterprise is directly affected by the rationality of its internal structure, because the liquidity and liquidity of various liquid assets are quite different.

1992 the international accounting standards board updated its accounting standards, requiring enterprises to replace the statement of changes in financial position with the statement of cash flow; 1998, the Ministry of Finance of China also made the same request.

3. The role of cash flow statement

The cash flow statement is a dynamic statement that summarizes the business activities, investment activities and fund-raising activities of an enterprise in the reporting period by cash inflow and outflow. Its preparation is based on cash and cash equivalents, and its structure is clearer and easier to understand than the statement of changes in financial position.

Compiling cash flow statement can provide cash flow information of enterprises and help investors and creditors directly and effectively analyze the ability of enterprises to repay debts, pay dividends and raise funds externally; Compiling cash flow statement is convenient for report users to analyze the difference between current net profit and operating cash flow, and objectively evaluate the profitability and the stability of operating turnover of enterprises; Compiling cash flow statement is convenient for users to analyze investment and financing activities related to and unrelated to cash, and predict the future development trend and cash flow of enterprises.

Second, the preparation of cash flow statement

1, direct method

The direct method takes the operating income in the income statement as the starting point, and directly lists the cash income and expenditure by category, thus calculating the cash flow of operating activities. Its basic principle is as follows:

Operating income+cash payment for assets receivable in the past, and increase in liabilities received in advance in the current period = cash payment for sales.

-Assets receivable formed in the current period and liabilities received in advance in the past have been realized.

Operating cost+payment of past liabilities payable, current inventory hoarding = cash at the time of purchase.

-Liabilities payable are formed in the current period, using past inventory.

Other income+other assets receivable cash received before, other liabilities payable increased in the current period = other cash received.

-Other assets receivable formed in the current period and other liabilities payable in the past have been realized.

Other expenses+payment of expenses payable in the past, and increase of prepaid expenses in this period = other cash.

-Decreased expenses payable in the current period and expenses to be amortized in the past.

-No cash expenses (accounting and amortization of various assets)

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Operating profit-△ non-cash operating assets (original value)+△ operating liabilities = net inflow of operating cash.

+No cash expenses (accounting and amortization of various assets)

Investment income+non-operating income and expenditure-△ non-operating net asset value (excluding asset accounting and amortization) = net inflow of investment cash.

-Financial expenses+△ non-operating liabilities+△ equity (except net profit carried forward in the current period) = net inflow of financing cash.

Net profit-△ non-cash assets (net value)+△ liabilities+△ equity (except net profit carried forward in the current period) = net cash inflow.

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Note: The operating profit here refers to the operating profit before interest;

Financial expenses refer to financing expenses such as interest and financing expenses, and operating financial expenses are classified as other expenses of business activities;

Non-operating income and expenditure refers to the profit and loss of fixed assets related to investment, and other income and expenditure related to operation are classified as operating activities.

1- 1 account method

Small enterprises with less business can choose a relatively simple accounting method to prepare the cash flow statement, that is, at the end of the period, according to the journals of cash, bank deposits and other accounts, analyze their sources or uses one by one, exclude internal transfers such as cash withdrawal and cash rolling, and classify and summarize them according to the requirements of the cash flow statement.

1-2 working paper method

Working paper method is a rigorous and easy-to-check method for preparing cash flow statement, which is adopted by most enterprises. However, this method is quite complicated. Here we have omitted some steps, such as adjusting entries and simplifying the preparation process into three steps. Simple examples are as follows:

The balance sheet and income statement of an enterprise 19## are as follows. In addition, we need to know the detailed information about investment, financing activities and some profit and loss items: selling short-term investment of 654.38 million yuan and buying long-term investment of 50,000 yuan in this period; Fixed assets inventory surplus, the original value is 50,000 yuan, the estimated depreciation is 20,000 yuan, and the current depreciation is 50,000 yuan; Repay 50,000 yuan of short-term loans and 654.38 million yuan of long-term payables; In this period, the sales expense is 20,000 yuan, and the management expense is 30,000 yuan. Among the financial expenses, the operating expenses are 5,000 yuan and the interest expenses are 25,000 yuan; The current profit of other businesses is rental income, and non-operating expenses are operating; Among the investment income, 654.38+00,000 yuan is the investment income from sale and 25,000 yuan is the long-term investment income.

First of all, we analyze the income and expenses in the income statement and classify them into the draft cash flow statement, and use () to indicate cash outflow; The second step is to analyze the reasons for the changes of each item in the balance sheet. Except for the carry-over net profit and cash changes, the changes of other assets, liabilities and equity are entered into the statement in reverse order, that is, the debit inflows and the credit outflows, and the changes are classified according to the income and expenses in the income statement. Finally, complete the cash flow statement.

balance sheet

Unit: 10,000 yuan

Property; property; assets

The beginning of the period

End of term

debit

creditor

Debt equity

The beginning of the period

End of term

debit

creditor

monetary capital

short-term loan

temporary investment

five

a 10

notes payable

Accounts receivable

A 10

Accounts payable-others

f 10

receivable other

five

three

accrued expenses

five

goods in stock

Total current liabilities

permanent investment

long-term payables

F 10

fixed assets

Pentane quaternary amine bromide

paid up capital

Less: accumulated depreciation

five

C (2)

undistributed profits

five

Net worth/value

Owner's equity

total assets

150

Total liabilities and equity

150

profit statement

Unit: 10,000 yuan

a sum of money

operate

investment

financing

There is no cash involved.

Sales revenue

105

Cost of sales

(65)

selling cost

(20)

Sales tax and surcharge

( 1)

profit on sales

Plus: other business profits

Less: management expenses

(3)、( 12)

financial expenses

three

(0.5)

(2.5)

trading profit

Plus: Investment income

3.5

1、2.5

Non-operating income

three

Less: non-operating expenses

( 1)

total profit

7.5

Less: income tax

2.5

(2.5)

net profit

five

Note: The analysis in this step can also be done directly when posting the draft cash flow statement.

cash flow statements

accrual system

Balance sheet adjustment inflow

Balance sheet adjustment outflow

Cash system

I. Commercial activities

1 1

Cash inflow:

Sell cash

105

A 10

Collect rent

Cash outflow:

(85)

Pay cash at the time of purchase

(65)

c3 +e5

(57)

Wages and benefits of employees

(2)、(3)

(5)

income tax

(2.5)

Other taxes and fees

( 1)

other charges

( 18)、( 12)

b2 +d5

( 19.5)

(0.5)( 1)

f 10

Two. investment

8.5

Cash inflow:

13.5

recoup one's investment

a 10

1 1

share in the profits

2.5

Cash outflow:

(5)

property rights

(5)

Three. Financial activities

( 17.5)

Cash outflow:

( 17.5)

repayment of debt

(5)

Pay off long-term payables

F 10

( 10)

interest payment

(2.5)

Fourth, it does not involve cash.

three

C5+C(2)

total

five

2. Indirect method

The indirect method takes the current profit in the income statement as the starting point, and adjusts the income and expenses that do not increase or decrease cash and the non-operating income and expenditure items unrelated to business activities, thus calculating the cash flow of business activities. Its basic principle is as follows:

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Net profit-investment income and income-△ non-cash operating assets+△ operating liabilities = net operating cash inflow

Non-industry revenue and expenditure refers to operating profit+expenses without reducing cash (accounting and amortization of various assets)

Investment income+non-operating income and expenditure-△ non-operating net asset value (excluding asset accounting and amortization) = net inflow of investment cash.

-Financial expenses+△ non-operating liabilities+△ equity (except net profit carried forward in the current period) = net inflow of financing cash.

Net profit-△ non-cash assets (net value)+△ liabilities+△ equity (except net profit carried forward in the current period) = net cash inflow.

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It can be seen that the difference between the two methods lies in the calculation of operating cash flow. The direct method is to obtain the operating profit from top to bottom according to the income statement and adjust it item by item, while the indirect method is to calculate the operating profit from bottom to top and then adjust it as a whole. Therefore, the indirect cash flow statement is compiled on the basis of the direct method, and the investment and financing parts are not moved. Just use the income and expenses under the accrual basis in business activities as operating profit, that is, net profit MINUS investment income and non-operating income and expenses plus financial expenses, and then summarize and list the changes in operating assets and liabilities. In the above example, the cash flow of operating activities compiled by indirect method can be calculated as follows:

cash flow statements

accrual system

Balance sheet adjustment inflow

Balance sheet adjustment outflow

Cash system

I. Commercial activities

1 1

net profit

five

Less: investment income

3.5

Non-operating income

three

Plus: Financial expenses

2.5

trading profit

Plus: depreciation

five

Less: Increase in operating accounts receivable.

b2 +c3

five

Add: Increase in business items payable

f 10+e5

A 10+E5

Indirect method fails to list the source of cash inflow and the purpose of cash outflow from operating activities in detail, but it is helpful to analyze the quality of enterprise net profit from the perspective of cash flow. Therefore, China's current accounting standards stipulate the direct method, and at the same time, it is required to disclose the information of adjusting net profit to cash flow from operating activities in the notes to the cash flow statement, that is, the indirect method is used to calculate cash flow from operating activities.

3. Some differences between Chinese and western cash flow statements.

In terms of compilation method, China requires that the direct method must be adopted, and the indirect method should be supplemented to adjust the net profit to the information of cash flow from operating activities; International accounting standards and American financial accounting standards encourage the use of direct method, but indirect method can also be used.

In the specific classification of cash flow from operating activities, China has broken the pattern of the income statement itself and requires specific analysis and decomposition of each item in the income statement. For example, accounts receivable and notes receivable should be decomposed into payment income and value-added tax, sales income should be adjusted according to payment income, rental income should be decomposed from other business income, sales cost, expenses and management expenses should be decomposed, and financial expenses and management expenses should also be analyzed and decomposed. However, the classification of cash flow from operating activities in international accounting standards and American financial accounting standards is basically consistent with the income statement, and the preparation of the income statement is relatively simple.

In terms of investment income, China regards general dividends, interest income and capital income as cash inflows generated by investment activities, and investment income does not need to be decomposed; However, American financial accounting standards regard capital gains as cash inflows from investment activities and general dividends and interest income as business activities, so it is necessary to decompose investment income. International accounting standards allow you to choose between the above two methods.

In terms of financing cost, China regards the payment of interest and dividends as cash outflow from financing activities, and financial expenses need to be broken down in detail; However, American financial accounting standards regard dividend payment as cash outflow from financing activities and interest payment as business activities, so financial expenses do not need to be decomposed; International accounting standards allow you to choose between the above two methods.

Third, the analysis of cash flow statement

1, structural analysis

First of all, we should analyze the internal structure of cash flow, that is, the contribution of management, investment and financing to net cash flow. In this analysis process, we should combine the business cycle of the enterprise to determine the focus of the analysis.

For developing enterprises, the cash flow from operating activities may be negative. It is necessary to analyze the financing activities of enterprises, whether their capital value is in place, how liquidity is, whether enterprises are over-indebted, and whether it is possible to continue to raise enough working capital; At the same time, judge whether its investment activities are suitable for business needs and whether there is a phenomenon of misappropriation or expense of funds. We should forecast and analyze the cash flow, and set the repayment period at the period when the operating activities can generate net inflow.

For growing enterprises, the cash flow generated by operating activities should be positive. Focus on the analysis of the structure of cash inflow and outflow from operating activities, analyze the speed of withdrawing funds, whether credit sales are powerful and appropriate, understand the cost control, predict the development space of enterprises, and whether enterprises make full use of the funds payable. At the same time, we should pay attention to whether there is excessive expansion of enterprises at this stage, which leads to an increase in debt.

For mature enterprises, investment activities and fund-raising activities tend to be normalized or appropriately contracted. We should focus on whether the cash inflow from its business activities is guaranteed, whether the growth rate of cash income and sales income matches, and pay attention to whether the enterprise pays excessive dividends, whether there is capital outflow, and whether the cash inflow mainly depends on investment income or unclear non-operating income.

For depressed enterprises, the cash flow of operating activities began to shrink. Should focus on the analysis of whether its investment activities are profitable in the process of investment recovery, whether there are risky expansion activities, and at the same time, whether the enterprise reduces the debt and interest burden in time. At this stage, the loan term should not exceed its cash flow and there is a deficit.

Combined with the above examples, we can roughly infer that the enterprise is in the growth stage or mature stage, with outstanding main business, good sales return, effective control of expenses, and timely adjustment of its financing share when it makes profits, thus reducing the interest burden.

2. Ratio analysis

If you are a familiar customer, you have made a detailed analysis of the first cash flow statement, and we can also make a relatively simple ratio analysis directly. Through ratio analysis, we can roughly analyze the solvency, operating ability and profitability of enterprises. Common indicators are as follows:

1) solvency: cash ratio, that is, the ratio of cash and cash equivalent balance to current liabilities at the end of the period. It is generally believed that this ratio should be around 0.25, which can meet the capital demand for a quarter. Cash interest rate, that is, the ratio of net operating cash flow to interest before interest payment. This ratio is derived from the multiple principle of earned interest, and it is generally believed that the ratio should be at least greater than 1, preferably around 2-2.5. In this case, the cash ratio of the enterprise is 0. 16, and it is difficult to repay all the short-term loans, which still depends on its financing ability; The cash interest rate is 4.4, and paying interest is enough.

2) Operating capacity: the cash sales rate, that is, the current sales cash divided by the accounts receivable at the beginning, the balance of bills receivable minus the balance of accounts receivable plus the current sales income. Purchase cash rate, that is, the current purchase cash divided by the accounts payable at the beginning, the balance of notes payable MINUS the balance of prepayments plus the current sales cost. In this example, the cash sales rate of the enterprise is 70%, and the payment is recovered quickly. The cash purchase rate is 7 1.25%, which is slightly higher than the cash sales rate. As time goes on, enterprises may hoard some funds in inventory.

3) Profitability: the difference between operating cash and operating profit, that is, the difference between the current net cash flow of operating activities and the current operating profit. The cash dividend payment rate, that is, the ratio of the cash dividend declared to be distributed in the current period to the current cash balance, reflects the ability of the enterprise to distribute profits. In this case, the difference between operating cash and operating profit is positive 10, and the profit is relatively real. At present, the early investment of enterprises has a certain degree of return. Considering the high debt in the early stage, the enterprise is in the harvest period and debt repayment period, but the enterprise fails to make appropriate follow-up investment for future development.

3. Trend analysis

If we get a continuous multi-period cash flow statement, we can also compare the statements of more than two periods side by side and analyze their trends. Trend analysis can be divided into absolute comparison and relative comparison, which is mainly used for cash flow of operating activities. In an absolute comparison report, you can usually add two columns of "Increase/Decrease Amount" and "Increase/Decrease Percentage". In the relative comparison report, the total cash inflow is generally 100%, and other items are compared to calculate the structural percentage. The trend analysis of business activities should generally be combined with the sales growth of enterprises to analyze whether the changing trends of the two match. The growth of cash inflow is mainly due to the growth of sales or the acceleration of payment, the growth of cash outflow is due to the increase of sales or the backlog of inventory and the huge increase of expenses, and the growth rate of cash inflow and outflow is faster and the growth trend of cash flow is stable.