Cash Flow Statement

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define a cash flow statement. 
  • Explain the purpose of a cash flow statement.
  • Explain what a cash flow statement may be used for. 
  • Define net cash flow.
  • Compare cash inflows and income.
  • Compare cash outflows and expenses.
  • Compare net cash flow and net income.
  • Calculate net cash flow.
    • Projected
    • Current
  • Determine how each of the factors may impact net cash flow, such as:
    • Purchase of assets
    • Sale of assets
    • Change in income
    • Change in expenses
      • Debt servicing
      • Lifestyle Expenses
      • Savings 
  • Evaluate how each of the factors may impact net cash flow.
  • Explain the potential impact of positive or negative net cash flow on net worth.
  • Interpret a change in net cash flow over a period of time. 
  • Explain the relationship between cash flow and net worth.
  • Define a personal savings rate.
  • Explain a personal savings rate. 
  • Calculate a personal savings rate.
  • Interpret a personal savings rate. 
  • Explain the importance of maintaining sufficient resources for emergency purposes.
  • Identify suitable resources that may be used for emergency purposes.
    • Amount
    • Characteristics
  • Evaluate the ability to financially sustain an emergency.

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define a cash flow statement. 
  • Explain the purpose of a cash flow statement.
  • Explain what a cash flow statement may be used for. 
  • Define net cash flow.
  • Compare cash inflows and income.
  • Compare cash outflows and expenses.
  • Compare net cash flow and net income.
  • Calculate net cash flow.
    • Projected
    • Current
  • Determine how each of the factors may impact net cash flow, such as:
    • Purchase of assets
    • Sale of assets
    • Change in income
    • Change in expenses
      • Debt servicing
      • Lifestyle Expenses
      • Savings 
  • Evaluate how each of the factors may impact net cash flow. 
  • Explain the potential impact of positive or negative net cash flow on net worth.
  • Interpret a change in net cash flow over a period of time. 
  • Explain the relationship between cash flow and net worth.
  • Define a personal savings rate.
  • Explain a personal savings rate. 
  • Calculate a personal savings rate.
  • Interpret a personal savings rate. 
  • Explain the importance of maintaining sufficient resources for emergency purposes.
  • Identify suitable resources that may be used for emergency purposes.
    • Amount
    • Characteristics
  • Evaluate the ability to financially sustain an emergency.
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