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| Reviewed: |
Mar 19, 2008 by Business Editorial Board |
| Overview: |
Cash Flow Learning Trail is the second of eight segments available from the BizEd.com website. The module provides a theoretical discussion of the topic, divided into five sections as follows: 1) Introduction to Cash Flow, 2) The Parts of the Cash Flow Statement, 3) Revision questions, 4) Sources of Funding and Solving Cash Flow Problems, and 5) Ways in which a Cash Flow Statement is different from a Profit and Loss Account. The series is presented as a learning trail that progressively builds from basic principles to more advanced theory. It was also designed for use by students aged 14-16 residing in the United Kingdom pursuing their General Certificate in Secondary Education (GCSE). |
| Learning Goals: |
As a result of reading and studying the materials, students will:
1) Understand why a Cash Flow Statement and Forecast Cash Flow Statement are used; 2) know how a Cash Flow Statement is constructed; 3) be able to identify sources of funding to solve cash flow shortages, and 4) undestand how cash flow is different from a profit and loss account. |
| Target Student Population: |
United Kingdom students age 14-16 pursuing a General Certificate in Secondary Education |
| Prerequisite Knowledge or Skills: |
Basic accounting terminology |
| Type of Material: |
Reference material or text based lecture with homework assignment. |
| Recommended Uses: |
Outside of class reading and homework |
| Technical Requirements: |
Current browser |
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| Strengths: |
This theoretical discussion focuses on two types of Cash Flow Statements, the author refers to as: 1) an Actual Cash Flow Statement, and 2) a Forecast Cash Flow Statement. The primary focus seems to be on the Forecast Cash Flow Statement. Cash Flow Learning Trail does not teach one how to prepare these statements, but rather focuses on their purpose and how they are used. The module contains a worksheet at its midpoint that contains open ended questions. The worksheet must be printed and written responses provided. All answers can be found in the first two segments of the module. |
| Concerns: |
The discussion of the Cash Flow Statement does not appear to be grounded in accounting as a discipline. Based on the Statement of Cash Flow contained in the Financial Statements of publicly traded British companies, the format presented and content of the discussion is inaccurate.
According to UK GAAP, the three components of the Statement of Cash Flow are operating, investing, and financing activities, not revenues, expenses, and balance as presented in this discussion. Furthermore, cash flow should be discussed in terms of cash receipts and payments rather than revenues and expenses. Revenues and expenses include both financial and non-financial inflows and outflows whereas a statement of cash flow strictly provides information on receipts and payments of cash. The same holds true for the Cash Flow Forecast.
Most of the learning object refers to operating cash flows but when talking about managing cash flows reference is made to some financing and investing cash flow sources.
A variety of terms also appear to be defined incorrectly from an accounting standpoint. For example: Revenue is not cash flowing into a business, but rather increases in assets that result from the sales of products or services during the normal course of business operations.
The illustration provided for the Cash Flow Forecast is also atypical. The implication that the appearance of the Cash Flow Statement and Forecast Cash Flow Statement are similar is also incorrect. The information provided on the Cash Flow Forecast is more aligned with the creation of a cash budget and to that extent may be of some usefulness.
Terms seem to be introduced without context. |
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Potential Effectiveness as a Teaching Tool |
Rating:     |
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| Strengths: |
Perhaps this module is of some benefit from an economics standpoint for the targeted population. The module includes one formative exercise. Content within the last two segments seems suitable. |
| Concerns: |
Learning objectives are not specifically identified, but can be assumed from the overview provided by the author.
Prerequisite knowledge has not been identified.
No summative exercise has been included for the final two segments. No general summary is included.
Progression is poor as one can easily get lost when clicking on ancillary topics.
Reference is made to a company named GoodWood in Part 1 but information on this company is not provided until Part 2.
No interactivity exits with Part 3, questions are merely listed, with no ability to complete them on-screen, submit them on-line, and receive feedback.
In Part 5 no reference is made to accrual based accounting, as the primary reason for differences between profits and cash flows. In addition, no distinction between operating, investing and financing cash flows is presented. As a result, coverage of these differences is very superficial. |
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Ease of Use for Both Students and Faculty |
| Rating: |
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| Strengths: |
The text is arranged nicely on the page for a text based discussion. Key terms are bolded. Links to ancillary information is included. Forward and backward navigation works as intended. |
| Concerns: |
This module is not interactive and amounts to reading text and as such is rather tediuos.
No real world examples have been incorporated to illustrate concepts.
Users can easily get lost in the module when one branches off to ancillary information. When drilling down within a segment the links at the bottom of a page do not make sense. For instance, in Part 1, when in the windows for revenues or expenses and using the links at the bottom of the respective page, users are taken to pages in Part 2. |
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