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Profitability Analysis and the Cash Flow Statement

Seminar Objectives:

To help the participants to:

     • Interpret the income statement results with more depth and confidence

     • Prepare a simple cash flow statements

     • Differentiate between profitability and healthy cash flows

A. Profitability Analysis

    1. Sales activity

    2. Gross profit margin

    3. Operating profit

    4. Net income

B. Preparing the Cash Flow Statement

    1. Explaining the logic of the process in preparing the cash flow statement

    2. Discuss the information value of the Cash Flow Statement

        a. Operating cash flows

        b. Investing cash flows

        c. Financing cash flows

C. Differentiating between profitability and cash flows

    1. The Connection between the Balance Sheet/ Income Statement and the Cash Flow Statement

    2. Why profitable operations may still lead to an unhealthy cash position

    3. Examples of cash flows that may not impact on the current operating results (profitability)