Week 15 — The Statement of Cash Flows, Analysis, and the Course Synthesis

Why this matters

Whether you check a food truck's bank balance against its profit, review a repair shop's statements before lending it money, or open a public company's annual report, you need to know where the cash went and what four simple ratios say.

In plain language

A business can earn a profit and still run short of money, because profit and cash move on different schedules. This week you build the statement of cash flows (the report of where a business's cash came from and where it went). You sort every dollar of cash into three groups: running the business, buying and selling long-lived assets, and dealing with owners and lenders. Then you compute four ratios (one figure from the statements divided by another) and read each one in a plain sentence. Last, you read the bicycle shop's whole story, from its first month to the end of its second year.

• Already covered: Week 5's statements, Week 11's depreciation, and Week 14's equity.
• This week: the statement of cash flows, the indirect method, four ratios, and a 10‑K.
• How they connect: every account from the course reappears as a line of cash.

Focus

Why did the bicycle shop's cash change by a different amount than its profit, and what do its statements say?

By the end of this module, you should be able to:

• [ ] sort cash flows into operating, investing, and financing
• [ ] prepare the operating section by the indirect method
• [ ] tie the statement of cash flows to the change in cash
• [ ] compute and read four ratios in plain sentences

To-do

Plan your week

1. Read Chapter 15 (~45–55 minutes), then the lecture and slides.
2. Work the lecture tutorial (60–90 minutes).
3. Do the practice set (15–25 minutes).
4. Do the Accounting Workshop (about 90 minutes), the discussion, and the assignment.
5. Take the quiz.

This week's checkpoint: build the bicycle shop's Year 2 operating section and show that the three sections tie its cash from $22,000 to $71,000.

You've got this

This is the last teaching week. Take it in order, and ask your instructor if a step snags.

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