Statements of Cash Flows

Statement of Cash Flow
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Statement of Cash Flow
At the end of every financial year, companies prepare financial statements to examine different aspects of the organization. Among the statements prepared include cash flow statements. Cash flow statements enable the stakeholders to gain an insight into the changes observed in the net assets of the organization as well as the adaptation to changes occurring in the different elements affecting the cash flow of the organization. These elements enable the organization to carefully manage these elements. Cash flow also enables the company to make key decisions that affect the profitability of the company (Kokemuller).
The cash flow statement is classified into cash from operating activities, financing, and, investing activities. In this case, operating activities include cash generated and spent in the sale or purchase of the organization’s assets. Assessing cash from operating activites is by either direct or indrirect method. The direct method includes assessing cash directly into and paid out of the organization while the indirect method includes adjusting the net income to operating cash. Investing activities include cash obtained from assets classified as being non-current. As for financing activities, they include cash related to equity and non-current liabilities.
Examining the cash flow statement of Coca-Cola reveals a trend, especially from the operating activities. In the past three years from 2015 to 2017, there is a decreasing trend.

The decrease can be attributed to factors such as restricting, fluctuating foreign currencies and, increased payments. A contrasting trend is observed for financial activities as there is an increase in cash used for financing activities from 205 to 2017.
From the analysis, it is true when they say that “Cash is King.” An organization having plenty of cash at its disposal enables it to have a relatively greater purchasing power in addition to having the ability to borrow which will protect the organization against debts.
References
Kokemuller, N. (n.d.). Importance of Cash Flow to a Business. Small Business – Chron.com. Retrieved from http://smallbusiness.chron.com/importance-cash-flow-business-57376.html