knowledge topics
Cash Flow Statement
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- 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
- Explain 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.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
