Tutor profile: Austin P.
Why should a programmer use the NumPy library and its functions instead of lists?
NumPy allows a programmer to process data with arrays instead of lists. Arrays are stored in memory in such a way that lets a user run code many times faster than they could if the data were stored in lists, due to a principle called locality of reference. In addition, the NumPy library has many built-in functions that let us manipulate the entire arrays with fewer lines of code than would be necessary with data of the list type.
Subject: Corporate Finance
How would you create a Statement of Cash Flows from a Balance Sheet and Income Statement?
The first line on a Statement of Cash Flow, prepared using the Indirect Method, is simply net income from the Income Statement. Next, add back non-cash expenses to the Statement of Cash Flow including depreciation and amortization found on the Income Statement's Operating Expenses section. Next, adjust for changes in net working capital by adding back a decrease in operating assets or increase in operating liabilities, and subtracting an increase in operating assets or decrease in operating liabilities. Changes in operating assets and liabilities can be found in the yearly changes on the Balance Sheet. For example, if taxes payable increased over the prior period, record an increase to the Cash Flow, because this particular company has paid less cash for tax than the expense they recorded on the income statement. This completes the first section of the Statement of Cash Flow, called "Cash Flow from Operations". The next section, "Cash Flow from Investing", shows a cash increase or decrease from investing activities. Company decisions like buying fixed assets or buying investment securities will decrease the total. Decisions like selling factories or collecting interest from investments will increase the total. These values are found in the periodic changes on the Balance Sheet. For example, if the Plant, Property, and Equipment line increased from one year to the next, the company would record a decrease in investing cash flow. Interest income will be found on the Income Statement. The final section, "Cash Flow from Financing", deals with financing decisions. Dividend payments and stock buybacks are a cash outflow while a stock issuance is a cash inflow. The value of dividends paid is found in dividend payable on the Balance Sheet, a line item created when the company declares it is going to pay a dividend. A stock buyback will be recorded on the Balance Sheet under Treasury Stock. Finally, we sum the totals from all three sections to get total change in cash flow. This value is equal to the difference between the two end periods on the Balance Sheet's cash line.
What is the difference between accounts payable and accounts receivable?
Accounts payable is recorded under Current Liabilities and accounts receivable is recorded under Current Assets on a company's Balance Sheet. Accounts payable represents payment owed to another entity for goods or services it already received. It is a kind of short term debt because the company who records it bought the goods or services on credit to be paid back later. Accounts receivable is just the opposite. It represents money owed to a firm for goods or services it previously delivered to its customers.
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