Cash flow classification

1. Cash flow report

1. Importance of cash flow report:

1. Hard to fake — you cannot borrow cash from others in order to make the profit “looks” better then return those cash back. — sensitive
2. Thus, cash flow can be used to check the real financial condition of a company

2. Types of cash flow changes:

1. Operating cash flow — 来自主营业务的净收入-CFO (a) trading securies trasaction is included (b) interest in/out is included (c) tax is included (d) dividend received is CFO, but dividend paid is CFF
2. Investing cash flow — 变卖/收购长期资产,比如土地-CFI (a) fixed assets trasactions (b) long-term debt and equity transactions (excluding trading security) (c) principle received from loans made to others(贷款还回的本金，利息是CFO)
3. Financing cash flow — 融资/还款-CFF (a) 融资往往两条路：债务融资+股票融资. 所以发债还的本金是CFF，股票融资也是CFF (b) 还债还的本金 (c) dividend paid is CFF

3. GAAP vs IFRS:

1. Dividend paid: for IFRS, it can be CFO or CFF
2. Taxes paid: for IFRS, it can be CFO, CFI, CFF