Enables you to identify whether the operations of the business are generating sufficient cash to cover required investments. If this account is not greater than the investments, the resulting cash flow from operations is negative, which may adversely affect value creation for that period.
If Cash from Operating Cycle (v4320.00) cannot pay for the investments, it could indicate that, for a year:
The business is investing in that period, using funds from other sources such as debt or equity; or
The business is not generating much operating profit, causing the Cash from Operating Cycle (v4320.00) to be less than the amount desired.
Cash from Operating Cycle (v4320.00) is calculated as follows:
(v4060.00) Funds from Operations After Tax
- (v4070.00) Incr. Working Capital Investment
= (v4320.00) Cash from Operating Cycle
Change in Cash, Excess Mkt. Sec., and Mkt. Sec (v4490.00)
Appears on the Indirect Cash Flow Statement and is calculated as follows:
(v2000.01) Incr. in Cash
+ (v2017.01) Incr. in Total Mkt. Securities
= (v4490.00) Change in Cash, Excess Mkt. Sec., and Mkt. Sec.