Question
How does debt issuance affect both the cash flow statement and the balance sheet?
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Answer
It increases cash in CFF and increases long-term liabilities.
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Question
What working-capital memory rule helps predict CFO adjustments?
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Answer
Current assets move opposite CFO; current liabilities move with CFO.
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Question
What is the key cash flow identity linking the three sections to the cash balance?
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Answer
Beginning Cash +CFO+CFI+CFF=Ending Cash.
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Question
Under the indirect method, what is the starting point for calculating CFO?
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Answer
Net income.
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