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Cash Flow Statements and preferred dividends

Skip87

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When constructing a cash flow statement, how should preferred dividends be treated?

Here's what I did:

Cash flow from operations
Net Income (minus preferred dividends)

Cash flow from Financing
Dividends paid: 0 (because I already took it out from net income in cash flow from operations)

Did I do everything correctly, or should I use the net income before proffered dividends as the net income for OPERATIONS and subtract out preferred dividends from FINANCING?

any help will be much appreciated, thanks.


*i'm trying to get an answer as fast as possible so that's why i'm spamming all the message boards that I have bookmarked.
 

FidelCashflow

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Originally Posted by Skip87
*i'm trying to get an answer as fast as possible so that's why i'm spamming all the message boards that I have bookmarked.

LOL. You're really scraping the bottom of the barrel buddy.
 

mbc

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Preferred dividends are the same as regular dividends except they are paid to preferred shareholders (and so possibly at a different rate and with priority ahead of common shareholders). As such, they are a financing cash flow item. Your cash flow from operations should start with Net Income (which by definition is before all dividends, preferred and otherwise), after which you adjust it for all non-cash operating income items (i.e. add back depreciation, subtract increases in working capital, etc).
 

RJman

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