Asset Management: Consolidated Cash Flow Statement

An accounting statement reflecting the cash inflow, cash outflow and net cash flow generated by business activities, investment activities and fund-raising activities in a certain period.

Like the cash flow statement, the cash flow in the consolidated cash flow statement can be divided into three categories: cash flow of business activity, cash flow of investment activities, and cash flow of fund-raising activities.

The compilation of the consolidated cash flow statement and the compilation of the cash flow statement of a single enterprise are exactly the same in principle and procedure.

However, there are some special problems in the compilation of the consolidated cash flow statement, including the following aspects:

(1) calculating business activities by indirect method.

At the same time, the depreciation of fixed assets and the amortization of intangible assets should still be added to the consolidated net income. Minority shareholders' income should also be added back to the consolidated net profit, and minority shareholders' losses will be deducted from the consolidated net profit.

When the enterprise merger is handled according to the purchase law, depreciation and amortization expenses shall be calculated on the basis of fair value (including goodwill) of the assets of the company on the combined date. The net profit of the minority shareholders belonging to a minority shareholder shall also be incorporated into the net cash flow of the business activity, because all the cash of all the subsidiary companies is in the consolidated balance sheet.

(2) from the perspective of enterprise groups, only cash dividends paid by parent companies and cash dividends paid by subsidiaries to minority shareholders can be listed as cash flows (outflows) of fund-raising activities.

The cash dividends paid by the subsidiary to the parent company have no effect on the consolidated cash, because this is only the internal pfer of cash between the members of the enterprise group.

If the dividend of a minority shareholder of a subsidiary line is large, it can also be shown separately in the consolidated cash flow statement or disclosed by the supporting arc.

(3) the parent company's direct purchase of common stock by cash from subsidiaries does not change the amount of consolidated cash, so there is no need to report in the consolidated cash flow statement, while the parent company's purchase of additional shares from minority shareholders (stock market) reduces the number of combined cash.

This purchase is reported as the cash flow of investment activities in the consolidated cash flow statement.

(4) cash gained by parent companies in the sale of shares of some subsidiaries to the stock market has increased.

Cash is listed in the consolidated cash flow statement as the cash flow of investment activities, and the profit and loss of the sale share is calculated as business activity.

Adjust the net profit of the parent company and subsidiary company.

Usually, the consolidated cash flow statement is based on the consolidated profit statement and the consolidated balance sheet, rather than based on the profit statement and balance sheet of a single parent company or a subsidiary company.

In addition, other detailed information about the accounts of parent companies and subsidiary companies related to the preparation of consolidated cash flow tables is also needed.

Like the compilation of individual cash flow statement, there are two ways to compile consolidated cash flow statement: indirect method and direct method.

The Ministry of finance does not stipulate the consolidated cash flow statement in the Interim Provisions of consolidated financial statements, but requires the enterprise group to prepare a statement of changes in the consolidated financial position.

Since the accounting standards set by the Ministry of Finance contain the specific accounting standards of the cash flow statement, there is no criteria for changing the financial position. From the development trend, the consolidated cash flow statement will replace the consolidated financial statement.

In fact, some listed companies in China have already compiled and published the statement of cash flows.