外文文獻翻譯--現金流量表編制與分析利潤法和營業(yè)利潤法

1、<p>　　3890英文單詞，21400英文字符，中文7500字</p><p>　　文獻出處：Alver J. Preparation and analysis of cash flow statements: The net profit approach and operating profit approach[J]. Journal of Economic Literature, 2005,1

2、(1):39-52.</p><p>　　Preparation and Analysis of Cash Flow Statements: The Net Profit Approach and Operating Profit Approach</p><p>　　Jaan Alver</p><p><b>　　Abstract</b>&

3、lt;/p><p>　　A cash flow statement is required as part of a complete set of financial statements prepared in conformity with IFRS as well as US GAAP for all business enterprises.</p><p>　　IAS 7 lays

4、 down a formal structure for the cash flow statement. Cash flows should be classified under the following three standard headings: “Operating activities”, “Investing activities”, “Financing activities”.</p><p&

5、gt;　　The classification of cash flows among operating, investing and financing activities is essential to the analysis of cash flow data. Net cash flow (the change in cash and equivalents during the period) has little in

6、formational content by itself; it is the classification and individual components that are informative. Although the classification of cash flows into the three main categories is important, it should be mentioned that c

7、lassification guidelines are arbitrary. IAS 7 has not indicated h</p><p>　　Additional troubles arise from case that there is no standard definition of operating activities and consequently, cash flows from o

8、perating activities. Both IASB and FASB have taken position that operating activities are activities that are not investing or financing activities. At the same time the opinion that the association of a cash flow with p

9、rofit is the primary criterion for classifying the flow as operating, is expressed. The examples illustrate the influence of the differences in the </p><p>　　Keywords: cash flows, IAS 7, SFAS 95.</p>

10、<p>　　Introduction</p><p>　　The subjectivity of conventional accounting has become a matter for persistent debate in the academic and professional literature. Cash flow accounting (CFA) is a straightfor

11、ward information system that avoids complex issues of conventional accounting. Not surprisingly, cash flow statements (CFSs) have become important sources of information for users. Today, the clear consensus of national

12、and international accounting standard setters is that CFS is a necessary component of complete financial r</p><p>　　The purpose of this paper is to provide users with a guide which will assist them in the pr

13、eparation of cash flow statements and in particular provide a practical approach to the problems which may be encountered in implementing IAS 7.</p><p>　　1.About Terminology</p><p>　　It is clear

14、ly fundamental for understanding cash flow statements that the reader should be familiar with terms like ‘cash flow’, ‘operations’, ‘investing activities’, ‘financing activities’ and so on. Few analytical terms are more

15、widely used and, at the same time, less understood than the term ‘cash flow’. Professor Bernstein notes: “Standing alone and unqualified, the term cash flow is in its literal sense, meaningless.” (Bernstein, 1989). The a

16、uthor of this paper shares that opinion. An analy</p><p>　　?movement of money into and out of a business (The Oxford Dictionary for the Business World, 1993)</p><p>　　?the movement of money in

17、to (cash inflow) and out of (cash outflow) a business (Bannock and Manser, 1990)</p><p>　　?the movement of cash into and out of a business (Hussey, 1995)</p><p>　　?the money coming into a busi

18、ness from sales and other receipts and going out of the businesses in the form of cash payments to suppliers, workers, etc (Pass, Lowes, Pendleton and Chadwick, 1995)</p><p>　　?the amount of money flowing t

19、hrough an organisation in a given period. A company’s cash flow is equal to its trading profit plus any new money raised through a share issue or a loan during the period (Hindle, 1998)</p><p>　　?the amount

20、 of cash being received and expended by a business (A Concise Dictionary of Business, 1991)</p><p>　　?the amount of cash being received and expended by a business (A Dictionary of Finance, 1993)</p>

21、<p>　　?the amount of cash generated from a particular business activity or project (Westbrook, 1997)</p><p>　　?what is taken in minus what is paid out in a given time period (Shafritz and Oran, 1990)&

22、lt;/p><p>　　?the receipts and payments made by a business (Moles and Terry, 1999)</p><p>　　?the actual net cash, as opposed to accounting income, that flows into (or out of) a firm during some sp

23、ecified period. It includes net income plus depreciation and other noncash charges (Oldham, 1993)</p><p>　　?the reported net income of a firm, plus depreciation, depletion, amortisation, and extraordinary c

24、harges to reserves not paid in cash (Caruth and Stovall, 1994).</p><p>　　?a company adds the annual depreciation charge for fixed assets to its earnings after interest, taxes, and preferred dividends (Shook

25、 and Shook, 1990)</p><p>　　?net change in cash position durin g a period (Terminology for Accountants, 1992)</p><p>　　According to IAS 7 para. 6, cash flows are inflows and outflows of cash and

26、 cash equivalents.</p><p>　　Often writers when referring to cash flow mean cash generated by operations.</p><p>　　At the same time the meaning and content of the term ‘operating activities’ (‘op

27、erations’) remains debatable1.</p><p>　　2.The Structure of the Cash Flow Statement and Classification of Cash Flows</p><p>　　The IASB rules on the cash flow statement are set out in two standard

28、s: IAS 1 and IAS 7. IAS 7 lays down a formal structure for the cash flow statement. Cash flows should be classified under the following three standard headings:</p><p>　　?‘Operating activities’;</p>

29、<p>　　?‘Investing activities’;</p><p>　　?‘Financing activities’.</p><p>　　Therefore the cash flow statement is based on an activity format which classifies cash inflows and outflows in te

30、rms of operating, investing and financing activities. The classification of cash flows into operating, investing and financing activities is essential for the analysis of cash flow data. Net cash flow (the change in cash

31、 and equivalents during the period) has little informational content by itself; it is the classification and individual components that are informative. According to I</p><p>　　The most important section of

32、CFS is cash flows from operations or operating activities. In accounting literature it is possible to find different explanations of operating activities (operations):</p><p>　　1)Operating activities are pr

33、incipal revenue-producing activities of an enterprise and include delivering or producing goods for sale and providing services (Epstein and Mirza, 2003, p. 129).</p><p>　　2)Operating activities encompass a

34、ll the earning-related activities of the enterprise (Bernstein, 1989, p. 408).</p><p>　　3)The section of “cash flows from operating activities” should display cash flows from transactions that affect operat

35、ing income, and transactions other than investing and financing activities (Business Accounting Deliberation Council, 1998).</p><p>　　4)Operating activities are generally the cash effects of transactions an

36、d other events relating to operating or trading activities (Wood and Sangster, 1999, p. 243).</p><p>　　5)Operating activities are the principal revenue-producing activities of the enterprise and other activ

37、ities that are not investing or financing activities (IAS 7, para. 6).</p><p>　　6)Operating activities include all transactions and other events that are not defined as investing or financing activities. Op

38、erating activities generally involve producing and delivering goods and providing services (i.e. , transactions that enter into the determination of net income) (SFAS 95, para. 21).</p><p>　　Both IASB and FA

39、SB have taken the position that operating activities are activities that are not investing or financing activities. At the same time, the opinion that the association of a cash flow with profit is the primary criterion f

40、or classifying the flow as operating, is expressed. So, in general, operating activities are the major profit- directed activities of a company that eventually enter into the determination of profit.</p><p>

41、　　The question is: which kind of profit?</p><p>　　Investing activities. This area lists all the cash used or provided by the purchase and sale of income -producing assets. Activities in this category involve

42、 major changes in total assets and asset composition.</p><p>　　Financing activities. This section measures the flow of cash between a fir m and its owners and creditors. Activities in this category involve t

43、ransactions with creditors and owners.</p><p>　　Although the classification of cash flows into the three main categories is important, it should be mentioned that classification guidelines are arbitrary. IAS

44、 7 has not indicated clearly how to classify certain items that might fit logically in more than one of the major categories of the statement of cash flows. Differences in treatments of some items of CFS have set up a ne

45、cessity to formulate explicit criteria for the classification of items on CFSs.</p><p>　　3.Two Approaches in the Treatment of Operating Cash Flows</p><p>　　A typical format of the multiple-step

46、income statement divides the income statement into operating and nonoperating sections and would contain the following components:</p><p>　　IOperating section.</p><p>　　Includes the revenues an

47、d expenses of the company’s primary operations</p><p>　　A.Revenue (sales).</p><p>　　B.Cost of goods sold or service provided.</p><p>　　C.Selling expenses.</p><p>　　D

48、.General and administrative expenses.</p><p>　　E.Other operating expenses.</p><p>　　IINonoperating section.</p><p>　　Income from investments, gains and losses from the sale of op

49、erating assets, interest revenue, and interest expense are reported as arising from nonoperating activities.</p><p>　　The operating section includes sales, COGS, and operating expenses, while nonoperating se

50、ction includes revenues, gains, expenses, and losses stemming from activities that are not part of the main activity of the business.</p><p>　　Therefore, according to the income statement operating activitie

51、s are related to the transactions and other events entering into the determination of operating profit.</p><p>　　As its name implies, CFS is a flow statement , like the income statement. The format of CFS is

52、 grounded on the same idea – to classify activities as operating and nonoperating (the latter are subclassified as investing and financing activities).</p><p>　　Interpreting CFS requires an understanding of

53、two relations:</p><p>　　?the relation between profit (net profit or operating profit) and cash flows from operations;</p><p>　　?the relation between the net cash flows from operating, investin

54、g, and financing activities.</p><p>　　Operating activities in CFSs can be treated as inflows and outflows of cash related to the transactions entering into the determination of</p><p>　　1)net p

55、rofit;</p><p>　　2)net operating profit.</p><p>　　Consequently, depending on choice, net operating cash flow should</p><p>　　1)highlight the differences between operating profit an

56、d net cash flow from operating activities;</p><p>　　2)highlight the differences between net profit and net cash flow from operating activities.</p><p>　　It is worth mentioning that these two ve

57、rsions are based on different concepts of operating activities. The first concept could be denominated as ‘net profit approach’ and the second one as ‘operating profit approach’.</p><p>　　The conversion proc

58、ess classifies the income statement’s operating section into its major components and determines cash collections or payments for each of them. It clearly appears from the direct method of preparing CFS (especially if th

59、e so-called modified indirect method or “semi-direct” method has been used). Under the indirect method of preparing CFS the reconciliation of net profit with cash flows from operating activities is somewhat misleading be

60、cause the operating activities (and there</p><p>　　Despite the endless confusion about the concept of operations and about different aspects of operations, in our opinion the treatment of an item in the inco

61、me statement should determine its classification in the cash flow statement2. The only reconciliation of operating profit with cash flows from really operating activities</p><p>　　provides the link between t

62、he operating sections of two financial statements.</p><p>　　4.The Main Differences in the Classification of Cash Flows</p><p>　　Different treatments of operating activities and operating cash fl

63、ows result in differences in classifications. For example, there is little worldwide consensus as to the classification of interest and dividends paid and received in CFS. The classification of interest and dividends pai

64、d and received is solved very differently in various national standards. Interest paid can be considered as:</p><p>　　?operating cash outflow (because it enters into the determination of net profit);</p&

65、gt;<p>　　?financing cash outflow (because it is the cost of obtaining a financial resource). Dividends paid may be classified as either:</p><p>　　?operating cash outflows (thereby assisting users to

66、 determine the enterprise’s ability to make dividend payments out of operating cash flows);</p><p>　　?financing cash outflows (since they are a cost of obtaining financial resources). Dividends and interest

67、 receivable may be considered as either:</p><p>　　?operating cash inflows (since they enter into the determination of net profit);</p><p>　　?investing cash inflows (since they represent a retu

68、rn on investments).</p><p>　　These classification problems point out the complexity of financial statement classification and the fact that the terminology used in CFS does not correspond precisely to the mo

69、re early terminology that has been developed for the income statement. In the UK the problem is solved by adding a fourth category of cash flows: returns on investment and servicing of finance but this is not the case in

70、 other countries. </p><p>　　According to SFAS 95 interest received, dividends received, and interest paid are all classified as operating activities, while dividends paid are classified as financing activiti

71、es. This different treatment for dividends paid relates, in part, to the fact that dividends paid do not appear in the accrual income statement, whereas dividends and interest received (revenues) and interest paid (expen

72、se) do. Excluding dividends paid from the operating activities section simplifies the reconciliation </p><p>　　Many professionals have found these different treatments of interest and dividends (and dividend

73、s received vs dividends paid) inconsistent and hard to defend. The FASB cash flow pronouncement, SFAS 95, illustrates that the setting of an accounting standard is not a science, but is a “balancing act” with the differi

74、ng opinions of users and preparers being weighed against one another and the considerations of the cost of implementation being weighed against the potential benefits. Since standard s</p><p>　　In South Afri

75、ca interest and dividends received as well as paid are classified as operating outflows. Therefore the section of operating activities includes an item (dividends paid) which has no influence on net profit3.</p>&

76、lt;p>　　New Zealand’s standard classifies interest and dividend payments as financing outflows and interest and dividends received as investing inflows which is consistent with their presentation on the income statemen

77、t but it should be emphasised that in this case the net operating cash flow cannot be treated as cash-based equivalent to net profit.</p><p>　　IASB has not taken stand on the case – it is CFS’s preparers cho

78、ice how to classify interest and dividends. The illustrative example in Appendix 1 to IAS 7 (which does not form part of the standard) should illustrate the application of the standard to assist in clarifying its meaning

79、. Unfortunately, it does not make the situation clearer.</p><p>　　First of all, the illustrative example in Appendix 1 to IAS 7 is at variance with paragraph 20 of IAS 7, which states that under the indirect

80、 method, net cash flow from operating activities is determined by adjusting net profit or loss. Also, the presence of such an item as ‘cash generated from operations’ is worth mentioning in addition to ‘net cash from ope

81、rating activities’ in the operating section of illustrative CFS while the former is also a net amount. In the illustrative example interest</p><p>　　“No distinction is made between financial assets and tangi

82、ble assets (such as machines) in classifying their costs as investment cash flows. The return from the investment in machines is reported as operating cash flow. For consistency, the return on the investment in financial

83、 assets (the interest and dividend received) should also be reported as operating cash flow. Having classified interest and dividends received as operating cash flows, it seems natural to classify interest and dividends

84、pa</p><p>　　The author disagrees with Flower and supports the position taken by Nurnberg and Largay (1998) claiming that interest payments are considered to be financing cash flows in financial management th

85、eory.</p><p>　　Financial decision making emphasises the similarity of interest and dividend payments – interest is paid for the use of debt capital, whereas dividends are paid for the use of equity capital.&

86、lt;/p><p>　　The peculiarity of treating interest as an operating flow can be seen in the case of zero coupon or deep discount debt. The repayment of the principal at face value is a financing flow, but the diff

87、erence between the face value and the issue amount (the issue discount) should be treated as an operating cash flow at maturity rather than part of the repayment of principal. So repayment of debt reduces operating cash

88、flow.</p><p>　　Accordingly, in 1990 Turner Broadcasting System deducted $206.1 million of issue discounts on zero coupon senior notes repaid in calculating an operating cash flow of $25.8 million (Penman, 20

89、01, p. 317). This is correct accounting according to US GAAP, but the reported operating cash flow is an 89 percent distortion of the actual $231.9 million number.</p><p>　　It is worth noting that such a cla

90、ssification is strongly supported by the Accounting Standards for Consolidated and Parent-Only Cash Flow Statements (Business Accounting Deliberation Council 1998): “Interest and dividends should be displayed by either o

91、f the following methods:</p><p>　　a.Interest and dividends received and interest paid are displayed in the section of “cash flows from operating activities”, and dividends paid are displayed in the section

92、of “cash flows from financing activities”.</p><p>　　b.Interest and dividends received are displayed in the section of “cash flows from investing activities”, and interest and dividends paid are displayed in

93、 the section of “cash flows from financing activities”.”</p><p>　　In the author’s opinion different approaches in treatments of interest received and paid as well as interest and dividends paid are not justi

94、fied and acceptable. Given the availability of alternative modes of the presentation of interest and dividends received, and of interest paid, it is particularly critical that the policy adopted be followed consistently.

95、</p><p>　　5.Illustrative Examples</p><p>　　Simply reporting on cash flow is not enough. It is also necessary to analyse cash flow statements. The net change in cash is essentially meaningless; a

96、 firm can sell assets or incur liabilities to improve its cash position at the end of an accounting period (often called “window dressing”). What is important is the trend in the components of cash flow and the relations

97、hip among them. Investors can avoid a lot of bad investments if they analyse a company’s cash flows (especially operating cash fl</p><p>　　In the analysis of the CFS, each of the three principal segments sho

98、uld be reviewed separately since each focuses on a distinct part of business activities. Different combinations for classification of interest and dividends received as well as interest and dividends paid and the influen

99、ce of differences in classification on cash flow data should be taken into account.</p><p>　　According to standards (IAS 7, SFAS 95), cash flows (or to be more exact, operating cash flows) can be presented b

100、y either the direct method (also called direct approach, gross method, income statement method, income statement approach, inflow- outflow method, receipts and disbursements method) or the indirect method (also called in