added more info

mba/ch34.org

@@ -62,7 +62,7 @@
 
   - long term
 
-** Cash Flow
+** Income Statement
 - tells you about your income
   - top line is sales / revenue
   - bottom line is net income
@@ -102,10 +102,66 @@ The following is a fictional summary of a the finances of a watch company
 
 *** Explanation of the Financial Summary
 
-1. *Gross profit*: the monty you bring in taking away only the cost of manufacture
+**** Gross profit
-2. *Earnings Before Interest and Taxes (EBIT) / Operating Profit*
+the monty you bring in taking away only the cost of manufacture
+
+**** Earnings Before Interest and Taxes (EBIT) / Operating Profit
    - this is also called "The Line"
    - this composes operating expenses and depreciation
    - depreciation is the wear and tear on your equipment
      - in the US you can deduct that cost
      - this means you can deduct from the use of even a car
+
+** Cash Flow Statement
+
+*** A. Cash Flow From Operation
+| Expense Type                      | Pos/Neg | Amount   |
+|-----------------------------------+---------+----------|
+| NetIncome                         | Pos     | $30k     |
+| Increase in Depreciation          | Pos     | $2k      |
+| Increase in Accounts Receivable   | Neg     | -$10k    |
+| Increase in Accounts Payable      | Neg     | $20k     |
+| A = Net cash flow from operations | Pos     | **$42k** |
+
+*** B. Cash Flow From Investing
+| Expense Type          | Pos/Neg | Amount    |
+|-----------------------+---------+-----------|
+| Increase in equipment | Neg     | $40k      |
+|                       | Neg     | **-$40k** |
+
+*** C. Cash flow from Financing
+| Expense Type                     | Pos/Neg | Amount |
+|----------------------------------+---------+--------|
+| Increase in Loans                | Pos     | $20k   |
+| C = Net cash flow from financing | Pos     | $20k   |
+
+*** Total Net Change in Cash
+| Category               | Amount   |
+|------------------------+----------|
+| A + B + C              | $22k     |
+| Beginning Cash Balance | $60k     |
+| **Ending Cash Balance** | **$82k** |
+
+
+What we are determining in this category is ACTUAL CASH
+money we can actually use
+
+That's why in some cases, like Depreciation or Loans, we take off on the Income Statement but add it back here.  Or Accounts receivable, which haven't been received, we take off.
+
+**** Depreciation
+- it's important to understand that "depreciation" is actually just bullshit meant to help you on your taxes
+- you are "detracting" from your earnings what the depreciation should have been worth
+- but in reality, you didn't lose anything
+- so you have to add it back if you want to know what you really got
+
+**** Accounts Receivable
+- listed under 'current assets'
+- collection typically occurs within a year
+- money owed to a company by its customers for goods or services
+- expected to be receives
+- we have to deduct that b/c even tho we "should get it" we HAVEN'T got it
+
+**** Accounts Payable
+- listed under 'current liabilities'
+- payments generally made within a year
+- money a company owed to suppliers or venders for goods or services purchased on credit