phn 021-732-018
JOIN US ON FACEBOOK icot1 facebook
SABM Marketing Tools - Home Page Advertisment

Articles

Email me when new posts are made to this blog

Cash Flow Statement

Written by on July 7th, 2016.      0 comments

In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents,and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills.
 

Statement of Cash Flow - Simple Example
for the period 1 Jan 2006 to 31 Dec 2006
Cash flow from operations $4,000
Cash flow from investing ($1,000)
Cash flow from financing ($2,000)
Net cash flow $1,000
Parentheses indicate negative values

The cash flow statement was previously known as the flow of funds statement. The cash flow statement reflects a firm's liquidity.

The statement of financial position is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's financial transactions over an interval of time. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These non-cash transactions include depreciation or write-offs on bad debts or credit losses to name a few. The cash flow statement is a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities. Non-cash activities are usually reported in footnotes.

The cash flow statement is intended to:

 
  • provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances
  • provide additional information for evaluating changes in assets, liabilities and equity
  • improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods
1394150908-tax-code-changes-what-need-know-200
  • indicate the amount, timing and probability of future cash flows

The cash flow statement has been adopted as a standard financial statement because it eliminates allocations, which might be derived from different accounting methods, such as various time frames for depreciating fixed assets.

CLICK HERE to view our Cash Flow template or find it under our Business Tools

 
spabeauty logo
 

Comments

STAY UP TO DATE WITH THE LATEST INDUSTRY NEWS.

SIGN UP FOR OUR MONTHLY NEWSLETTER.

First name
Email
 

FOLLOW US

 facebook

ABOUT SPA & BEAUTY NZ

Spa & Beauty NZ provides spa and beauty therapists with the knowledge to stay at the top of the industry. Whether you’re looking for information on new products through to starting your own business, you can find all the information and support you need to be successful in this industry.
linkRead more
 

HAVE YOUR SAY

Share your experiences with the community and let us know what information you would like to see.
linkLet us know your thoughts
 

ADVERTISE WITH US

Want your business listed in our supplier database? Have a product professionals need to know about?
linkTalk to us about advertising