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.
- 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
- 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.
- Evaluate the ability to financially sustain an emergency.
Glossary of Verbs (mouse over to see definition)
To state exactly the meaning of
To be aware of / to recognize and correctly name / to locate an appropriate resource
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
To note the similarities and differences between two or more things
To determine an approximate value for
To find the value using mathematics
To change from one form or purpose to another
To reach a conclusion or make a judgement through careful study
To give the meaning of / to construe or understand / to translate orally