sfalk1
Aug 31, 2008, 10:47 AM
Dear Instructor,
This semester I am taking Finance 330. I understand everything except when it comes down to determining the difference between a source and use of funds. I understand that use of funds is issuing money, and source of funds of borrowing money, and that an increase in assets and decrease in liability is called a use (decrease in assets and increase in liability is a source. However, I am still unclear as to why a negative cash flow from assets can be a use and then in another equation our instructor told us it was a source . How do you know if the cash flow from assets is on the left or right? (he said it had to do with that). If cash flow to creditors and cash flow to stockholders are negative then they are sources. I still need a better way to tell if it's a source or a use. If you have any ideas or helpful way of explaining this concept please let me know as soon as possible. I have a quiz on Tues.
Sincerely,
Confused student
This semester I am taking Finance 330. I understand everything except when it comes down to determining the difference between a source and use of funds. I understand that use of funds is issuing money, and source of funds of borrowing money, and that an increase in assets and decrease in liability is called a use (decrease in assets and increase in liability is a source. However, I am still unclear as to why a negative cash flow from assets can be a use and then in another equation our instructor told us it was a source . How do you know if the cash flow from assets is on the left or right? (he said it had to do with that). If cash flow to creditors and cash flow to stockholders are negative then they are sources. I still need a better way to tell if it's a source or a use. If you have any ideas or helpful way of explaining this concept please let me know as soon as possible. I have a quiz on Tues.
Sincerely,
Confused student