Cash Flow Statements

Need to make a financial snapshot of your business! You need to understand profit and loss, although it doesn’t tell you the whole story. You may need to have a detailed picture of what happened to your business’s income during the accounting period. You need to understand the concept behind a cash flow statement and other financial documents, even if you are a working professional, business owner, entrepreneur, or investor. When you know how to read and understand a cash flow statement, it helps you obtain vital data related to the financial state of a company. To facilitate this understanding, here’s everything you need to know about how to read and understand a cash flow statement.

What is a cash flow?

Cash flow refers to the inflow and outflow of the amount of cash or its equivalents in business. In finance, the term determines the amount of money consumed or generated for a specified period. It also analyses the existing sources of the flow of cash along with a possible scope of inflows. Once calculated, cash flows can result in a negative or positive balance. A positive balance implies that the company has sufficient cash to fulfill its immediate liquidity requirements, while a negative tally indicates a constricted liquidity.

What is a cash flow statement?

A cash flow statement is a regular financial statement telling you how much cash you have on hand for a specific interval. The cash flow statement makes adjustments to the information recorded on your income statement, so you see your net cash flow—the precise amount of money you have on hand for that period. The current flow of cash for a given period is identified by reducing the opening balance of a given period from its closing balance.

Why do you need cash flow statements?

Cash flow statements are an essential part of financial analysis. They show you changes in assets, liabilities, and equity in the forms of cash outflows, cash inflows, and cash being held. You can use cash flow statements to create cash flow projections. On top of that, if you plan on securing a loan or line of credit, you’ll need up-to-date cash flow statements to apply.

Benefits of a Cash Flow Statement

  1. Verifying Profitability and Liquidity Positions- It helps the management to ascertain the liquidity and profitability position of businesses.
  2. Verifying Capital Cash Balance – Businesses can verify the idle and/or excess and/or shortage of cash position if the capital cash balance is determined.
  3. Cash Management – If the Cash Flow Statement is properly prepared, it becomes easy for you to manage the cash.
  4. Planning and Coordination – This helps the management to understand how much funds are needed and for what purposes, how much cash is generated from internal sources, how much cash can be procured from outside the business.
  5. Superiority over Accrual Basis of Accounting – As many technical adjustments are made in the latter case, Cash Flow Statement is more dependable than the collecting basis of accounting.

Cash flow statement format

Cash flow is calculated by making certain adjustments to net income by adding or subtracting differences in revenue, expenses, and credit transactions resulting from transactions that occur from one period to the next. As a result, there are two methods of calculating cash flow: the direct method and the indirect method.

1. Direct Cash Flow Method

The direct method subtracts the money you spend from the money you receive. The direct method adds up all the various types of cash payments and receipts, including cash paid to suppliers, cash receipts from customers, and cash paid out in salaries.

2. Indirect Cash Flow Method

While preparing the Cash Flow Statement as per the Indirect Method, Non-Cash and Non-Operating charges in the Income Statement are added back to the Net Profits while Non-Cash & Non-Operating Credits are deducted to calculate the Operating Profit before Working Capital Changes.

Activities of Cash Flow Statement

It covers three key aspects of your business activities that are as follows:

  1. Cash Flows from Operating Activities

This refers to regular business activities. Inflows include revenue from selling products or services, dividends received by the business, interest, and other cash receipts,Outflows include payroll, overheads, taxes, and payments to suppliers and vendors.

2. Cash Flows from Investing Activities

This refers to gains and losses from investments. Inflows include sales from business assets and payments from loans made by your business, Outflows include purchases of assets and loans made by your business.

3. Cash Flows from Financing Activities

This refers to capital that’s raised externally. Inflows include any money that’s been borrowed, as well as sales of your company’s securities. Outflows include dividend payments and servicing debt. Cash flows from financing activities are cash transactions related to the business raising money from debt or stock, or repaying that debt.

Cash Flow Statements are an integral part of Financial Statements. To gain a deeper understanding of Cash flow, join our upcoming 3 DAY Workshop

  • What You Will Learn From this Workshop
  • A detailed insight into how to Read a Cash Flow Statement.
  • What are the different types of Cash Flow Statements available?
  • How to utilize the Cash Flow Statements for making business decisions?
  • And more…

COURSE BY: 
PAYAL MOTLA is a Financial Consultant having a total of 8 years of experience in the field of Chartered Accountancy. Works as a Freelance Trainer in the areas of Finance and Taxation. Experience in taking live sessions on Finance and Taxation. Immense work experience in ITR Preparation, Finalization of Accounts, Bookkeeping, Internal Audits, Preparation of Scrutiny Paperwork, etc. This ensures that quality and experience are delivered to the students who wish to study Finance with her.

August 2, 2021

93 responses on "Cash Flow Statements"

  1. Very interesting subject, thanks for putting up. “Challenge is a dragon with a gift in its mouthTame the dragon and the gift is yours.” by Noela Evans.

  2. As I web-site possessor I believe the content matter here is rattling fantastic , appreciate it for your hard work. You should keep it up forever! Best of luck.

  3. I really like your writing style, great information, thank you for putting up :D. “God save me from my friends. I can protect myself from my enemies.” by Claude Louis Hector de Villars.

  4. медицинская справка 2023

  5. I’m not sure where you are getting your info, but good topic. I needs to spend some time learning more or understanding more. Thanks for fantastic information I was looking for this information for my mission.

  6. It’s not my first time to go to see this website, i am visiting this web site dailly and get nice data from here every day.

  7. Hey! I’m at work browsing your blog from my new iphone 3gs! Just wanted to say I love reading your blog and look forward to all your posts! Keep up the outstanding work!

  8. Pretty! This was a really wonderful post. Thank you for providing this info.

  9. Magnificent beat ! I wish to apprentice while you amend your site, how can i subscribe for a blog site? The account aided me a acceptable deal. I had been tiny bit acquainted of this your broadcast provided bright clear concept

  10. It’s an awesome piece of writing for all the internet people; they will get benefit from it I am sure.

  11. whoah this blog is excellent i love reading your articles. Keep up the good work! You know, a lot of people are hunting around for this info, you can aid them greatly.

  12. Wow, this piece of writing is pleasant, my sister is analyzing these things, thus I am going to tell her.

  13. At this time I am going to do my breakfast, once having my breakfast coming yet again to read additional news.

  14. Greetings from Los angeles! I’m bored to tears at work so I decided to check out your website on my iphone during lunch break. I really like the knowledge you present here and can’t wait to take a look when I get home. I’m shocked at how quick your blog loaded on my cell phone .. I’m not even using WIFI, just 3G .. Anyhow, wonderful site!

  15. I am actually happy to read this website posts which includes lots of useful data, thanks for providing such information.

  16. I blog frequently and I truly appreciate your content. This article has really peaked my interest. I am going to book mark your website and keep checking for new information about once a week. I subscribed to your RSS feed as well.

  17. I’m gone to inform my little brother, that he should also pay a visit this weblog on regular basis to take updated from newest information.

  18. Simply wish to say your article is as amazing. The clearness in your post is simply excellent and i can assume you are an expert on this subject. Well with your permission allow me to grab your RSS feed to keep up to date with forthcoming post. Thanks a million and please keep up the rewarding work.

  19. Thank you for any other great article. Where else may just anyone get that kind of information in such a perfect means of writing? I have a presentation next week, and I am at the look for such information.

  20. Your blog is a treasure trove of inspiration and motivation.

  21. I enjoy what you guys are usually up too. Such clever work and exposure! Keep up the excellent works guys I’ve added you guys to our blogroll.

  22. Thanks for finally writing about > %blog_title% < Liked it!

  23. If you are going for best contents like I do, simply visit this site every day because it offers quality contents, thanks

  24. I’m really enjoying the design and layout of your site. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a designer to create your theme? Excellent work!

  25. Hi there! I’m at work surfing around your blog from my new iphone 4! Just wanted to say I love reading through your blog and look forward to all your posts! Keep up the excellent work!

  26. Hey! I know this is kinda off topic but I was wondering if you knew where I could get a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having trouble finding one? Thanks a lot!

  27. You are so awesome! I don’t think I’ve truly read a single thing like that before. So good to discover someone with genuine thoughts on this topic. Seriously.. thanks for starting this up. This website is one thing that’s needed on the web, someone with some originality! Это сообщение отправлено с сайта GoToTop.ee

  28. Usually I do not read article on blogs, however I wish to say that this write-up very pressured me to try and do so! Your writing taste has been amazed me. Thank you, quite great article.

  29. It’s awesome to pay a visit this web site and reading the views of all friends regarding this piece of writing, while I am also keen of getting experience.

  30. Ahaa, its pleasant dialogue on the topic of this paragraph at this place at this website, I have read all that, so now me also commenting at this place.

  31. My spouse and I stumbled over here from a different web page and thought I may as well check things out. I like what I see so now i’m following you. Look forward to exploring your web page again.

  32. It is perfect time to make a few plans for the future and it is time to be happy. I have read this publish and if I may I wish to suggest you few fascinating things or advice. Perhaps you could write next articles relating to this article. I want to read more things approximately it!

  33. When someone writes an post he/she keeps the image of a user in his/her brain that how a user can understand it. Thus that’s why this paragraph is perfect. Thanks!

  34. I think what you postedwrotesaidbelieve what you postedwrotesaidbelieve what you postedwrotebelieve what you postedwroteWhat you postedwrote was very logicala lot of sense. But, what about this?think about this, what if you were to write a killer headlinetitle?content?typed a catchier title? I ain’t saying your content isn’t good.ain’t saying your content isn’t gooddon’t want to tell you how to run your blog, but what if you added a titlesomethingheadlinetitle that grabbed a person’s attention?maybe get people’s attention?want more? I mean %BLOG_TITLE% is a little vanilla. You might look at Yahoo’s home page and see how they createwrite news headlines to get viewers interested. You might add a video or a related picture or two to get readers interested about what you’ve written. Just my opinion, it could bring your postsblog a little livelier.

  35. Please let me know if you’re looking for a article author for your weblog. You have some really great posts and I think I would be a good asset. If you ever want to take some of the load off, I’d absolutely love to write some articles for your blog in exchange for a link back to mine. Please send me an e-mail if interested. Regards!

  36. Thanks , I’ve recently been looking for information about this subject for a long time and yours is the greatest I have came upon so far. However, what in regards to the bottom line? Are you sure about the source? Это сообщение отправлено с сайта https://ru.gototop.ee/

  37. Hi there! This post couldn’t be written any better! Going through this post reminds me of my previous roommate! He constantly kept talking about this. I will forward this article to him. Pretty sure he will have a very good read. Many thanks for sharing!

  38. I love your blog.. very nice colors & theme. Did you create this website yourself or did you hire someone to do it for you? Plz answer back as I’m looking to create my own blog and would like to know where u got this from. thank you

  39. Hi there would you mind stating which blog platform you’re working with? I’m looking to start my own blog in the near future but I’m having a tough time making a decision between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design and style seems different then most blogs and I’m looking for something completely unique. P.S Apologies for getting off-topic but I had to ask!

  40. This is my first time visit at here and i am in fact happy to read all at alone place.

  41. Its like you read my mind! You seem to know so much about this, like you wrote the book in it or something. I think that you could do with some pics to drive the message home a bit, but other than that, this is magnificent blog. A great read. I’ll definitely be back.

  42. Undeniably believe that that you stated. Your favourite justification appeared to be at the internet the simplest thing to keep in mind of. I say to you, I definitely get irked even as other people consider worries that they plainly do not understand about. You controlled to hit the nail upon the top as welland also defined out the whole thing with no need side effect , folks can take a signal. Will likely be back to get more. Thank you

  43. Outstanding quest there. What occurred after? Good luck!

  44. Hey just wanted to give you a quick heads up and let you know a few of the images aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different internet browsers and both show the same results.

  45. An impressive share! I have just forwarded this onto a coworker who was doing a little research on this. And he in fact bought me breakfast simply because I discovered it for him… lol. So let me reword this…. Thank YOU for the meal!! But yeah, thanx for spending time to discuss this matter here on your web site.

  46. Howdy this is somewhat of off topic but I was wondering if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding experience so I wanted to get advice from someone with experience. Any help would be greatly appreciated!

  47. This is the right website for anybody who wishes to find out about this topic. You realize so much its almost hard to argue with you (not that I personally would want toHaHa). You definitely put a new spin on a topic that’s been written about for decades. Great stuff, just great!

  48. Wow that was odd. I just wrote an extremely long comment but after I clicked submit my comment didn’t show up. Grrrr… well I’m not writing all that over again. Anyways, just wanted to say superb blog!

  49. Авторский мужской эротический массаж в Москве релакс студия

  50. I am in fact thankful to the owner of this site who has shared this impressive piece of writing at here.

  51. I’ll right away seize your rss as I can not find your email subscription hyperlink or newsletter service. Do you’ve any? Please allow me understand in order that I may subscribe. Thanks.

  52. I don’t even know how I ended up here, but I thought this post was good. I don’t know who you are but definitely you are going to a famous blogger if you are not already 😉 Cheers!

  53. I am really loving the theme/design of your web site. Do you ever run into any web browser compatibility problems? A small number of my blog audience have complained about my blog not operating correctly in Explorer but looks great in Opera. Do you have any tips to help fix this issue?

  54. Its like you read my mind! You seem to know so much approximately this, like you wrote the e-book in it or something. I think that you could do with some p.c. to force the message house a bit, however other than that, this is fantastic blog. An excellent read. I’ll definitely be back.

  55. I loved as much as you will receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get bought an nervousness over that you wish be delivering the following. unwell unquestionably come further formerly again since exactly the same nearly a lot often inside case you shield this increase.

  56. Lovely just what I was searching for.Thanks to the author for taking his clock time on this one.

  57. I think this is one of the most significant information for me. And i’m glad reading your article. But wanna remark on few general things, The website style is ideal, the articles is really excellent : D. Good job, cheers

  58. Nice post. I used to be checking continuously this blog and I am inspired! Very useful information particularly the last phase 🙂 I take care of such info a lot. I used to be seeking this particular info for a long timelong time. Thank you and good luck.

  59. Because the admin of this website is working, no hesitation very soon it will be famous, due to its quality contents.

  60. Hello there, I believe your web site could be having internet browser compatibility issues. When I look at your web site in Safari, it looks fine however, if opening in IE, it has some overlapping issues. I simply wanted to give you a quick heads up! Apart from that, fantastic blog!

  61. I’m impressed, I must say. Rarely do I encounter a blog that’s both educative and entertaining, and let me tell you, you have hit the nail on the head. The issue is something which not enough people are speaking intelligently about. I’m very happy that I stumbled across this in my search for something concerning this.

  62. Hi, this weekend is pleasant in favor of me, because this time i am reading this impressive informative article here at my house.

  63. Great post. I was checking constantly this blog and I am impressed! Extremely useful information particularly the last part 🙂 I care for such info a lot. I was looking for this certain information for a long time. Thank you and best of luck.|

  64. Does your website have a contact page? I’m having problems locating it but, I’d like to shoot you an e-mail. I’ve got some creative ideas for your blog you might be interested in hearing. Either way, great website and I look forward to seeing it develop over time.

  65. I know this website gives quality dependent articles and other information, is there any other web site which gives such information in quality?

  66. I constantly emailed this blog post page to all my friends, as if like to read it then my links will too.

  67. Hey, I think your website might be having browser compatibility issues. When I look at your blog site in Firefox, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, superb blog!

  68. Hi there, I enjoy reading all of your post. I like to write a little comment to support you.

  69. My spouse and I stumbled over here by a different web page and thought I should check things out. I like what I see so now i am following you. Look forward to going over your web page yet again.

  70. Can you tell us more about this? I’d love to find out more details.

  71. I really like what you guys are usually up too. Such clever work and coverage! Keep up the excellent works guys I’ve incorporated you guys to our blogroll.

  72. It is perfect time to make some plans for the future and it is time to be happy. I have read this post and if I could I wish to suggest you some interesting things or tips. Perhaps you can write next articles referring to this article. I want to read even more things about it!

  73. I’m really enjoying the design and layout of your site. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a designer to create your theme? Excellent work!

  74. Woah! I’m really enjoying the template/theme of this blog. It’s simple, yet effective. A lot of times it’s challenging to get that “perfect balance” between user friendliness and appearance. I must say you’ve done a excellent job with this. Also, the blog loads very quick for me on Opera. Superb Blog!

  75. I simply could not leave your site prior to suggesting that I really enjoyed the standard information a person supply on your visitors? Is going to be back steadily in order to inspect new posts

  76. Woah! I’m really loving the template/theme of this website. It’s simple, yet effective. A lot of times it’s very hard to get that “perfect balance” between superb usability and visual appearance. I must say that you’ve done a amazing job with this. In addition, the blog loads extremely fast for me on Opera. Exceptional Blog!

  77. I think this is among the most significant info for me. And i am glad reading your article. But should remark on some general things, The web site style is great, the articles is really nice : D. Good job, cheers

  78. Hi there everyone, it’s my first pay a quick visit at this web page, and piece of writing is genuinely fruitful for me, keep up posting such posts.

  79. Wow, wonderful blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your web site is great, let alone the content!

  80. I’m gone to tell my little brother, that he should also visit this web site on regular basis to get updated from latest gossip.

  81. Hi there, just become alert to your blog thru Google, and located that it is really informative. I am going to watch out for brussels. I will be grateful if you happen to proceed this in future. Lots of other people can be benefited out of your writing. Cheers!

  82. whoah this blog is wonderful i really like studying your posts.Stay up the great work! You recognize, many persons are hunting round for this info, you could help them greatly. https://www.hampdenstateuniversity.com/

  83. It’s hard to come by educated people for this topic, but you seem like you know what you’re talking about! https://www.uniofdenton.com/

  84. Definitely consider that which you said. Your favourite reason seemed to be on the internet the simplest thing to bear in mind of. I say to you, I definitely get annoyed at the same time as other people think about issues that they plainly don’t know about. You managed to hit the nail upon the highest as smartly as defined out the whole thing with no need side-effects , folks can take a signal. Will probably be again to get more. Thanks

  85. It’s really very difficult in this full of activity life to listen news on TV, thus I only use internet for that purpose, and take the most up-to-date news.

  86. Heya! I’m at work browsing your blog from my new iphone 3gs! Just wanted to say I love reading your blog and look forward to all your posts! Keep up the excellent work!

  87. Hey there, You have performed a fantastic job. I will definitely digg it and in my opinion recommend to my friends. I am sure they will be benefited from this site.

  88. Thank you for some other informative web site. Where else may just I am getting that kind of info written in such a perfect way? I have a venture that I am simply now operating on, and I have been at the glance out for such information.

  89. At this time I am going to do my breakfast, once having my breakfast coming yet again to read more news.

Leave a Message

Your email address will not be published.