Cash flow statement2

Hello Everyone -

 

The consolidated statement for cash flows appears on page 48 in the 2014 Hershey Company's SEC 10K annual filing.  As indicated in Julia's response, the financing activities section identifies cash outflow from repurchase (treasury stock) of common stock.  As you recall from last week's discussions, treasury stock is a deduction in under the stockholders' equity section of the balance sheet. The reported treasury stock on Hershey's balance sheet (page 47) illustrates an example of the interrelationship of the balance sheet to the statement of cash flows.

 

I suggest everyone take a few minutes to review the illustrated financial statements in one of the week's electronic reserve readings.   The article, financial statement analysis 101: Cash flow statement discusses the interrelationship of the income statement, balance sheet, and statement of cash flows in addition to the analysis of the statement of cash flow from the perspective of creditors to determine the credit worthless of a company.  The illustrated financial statements show how the income statement is based on the accrual basis of accounting or the matching principle.  The statement of cash flows captures the inflows and outflows of cash.  The net increase or decrease in cash accounted for in the three sections of the statement of cash must agree with the change in cash reported on the current and previous year's balance sheets.

Instructors question below: 

Class - Why is it important for investors and creditors to review the statement of cash flows when comparing the cash balance reported on the current and previous years' balance sheets?

 

References

Financial statement analysis 101: Cash flow statement. (2010). IOMA's Report on Managing Credit, Receivables & Collections, 10(10), 10-12. Retrieved from http://search.proquest.com/docview/762997608?accountid=35812

 

The Hershey Company SCE Flings (2015) 2014 SCE 10K Filing.  Retrieved fromhttps://www.thehersheycompany.com/investors/financial-reports/annual-and-quarterly-reports.aspx

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