Working with financial statements - part 3

In this lesson

1. 0:00 Financial statement analysis overview
2. 1:42 Cash flow statement analysis fundamentals
3. 2:31 Interpreting operating activities cash flow
4. 5:52 Analysing investing activities cash flow
5. 7:52 Understanding financing activities cash flow
6. 9:59 Using cash flow to predict future performance
7. 13:39 Worked example: Poppy's going concern assessment

About this lesson

historical cash flow patterns to predict future performance. The video breaks down cash flow statement analysis into three core sections. For operating activities, you'll learn to evaluate whether cash generation is positive or negative, examine the gap between cash from operations and compulsory payments (interest and tax), and assess how working capital changes affect liquidity. For investing activities, you'll understand why negative cash flow from capital expenditure is typically healthy for growing companies, and how to distinguish between concerning and expected patterns. For financing activities, you'll explore how share issues, loan transactions, and dividend policies create either positive or negative cash flows. You'll also discover how to use cash flow statements predictively. Rather than treating them as purely historical records, you'll learn to identify improvement opportunities—such as better working capital management, revised capital replacement policies, or restructured financing—that could enhance cash positions in future periods. A worked example involving long-term property, plant and equipment investment illustrates how context matters when assessing going concern status and interpreting negative cash movements. By mastering these techniques, you'll be able to provide comprehensive cash flow analysis in exam questions and real-world scenarios, moving confidently beyond surface-level calculations to meaningful business interpretation.

Duration: 17m