A cash flow statement is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. It is used to analyze a company’s liquidity, or its ability to meet its short-term obligations.
There are three main types of cash flow statements: the operating cash flow statement, the investing cash flow statement, and the financing cash flow statement. The operating cash flow statement shows the cash generated from a company’s operations, such as sales and expenses. The investing cash flow statement shows the cash used for investing activities, such as the purchase of property and equipment. The financing cash flow statement shows the cash used for financing activities, such as the issuance of stock and debt.
How to Create a Cash Flow Statement
To create a cash flow statement, you will need to gather the following information:
- A list of all of your cash inflows, which are the amounts of money that you receive from your business operations.
- A list of all of your cash outflows, which are the amounts of money that you spend on your business operations.
- Your beginning cash balance, which is the amount of cash that you have on hand at the beginning of the period.
- Your ending cash balance, which is the amount of cash that you have on hand at the end of the period.
Once you have gathered this information, you can follow these steps to create a cash flow statement:
- Subtract your cash outflows from your cash inflows to calculate your net cash flow.
- Add your net cash flow to your beginning cash balance to calculate your ending cash balance.
- Check to make sure that your ending cash balance matches your actual cash balance.
Using a Cash Flow Statement Template
If you are not comfortable creating a cash flow statement from scratch, you can use a cash flow statement template. There are many different cash flow statement templates available online, and you can choose one that is appropriate for your business.
When using a cash flow statement template, it is important to make sure that you understand the information that is being presented. It is also important to note that cash flow statement templates can be customized to meet your specific needs.
Using a cash flow statement template can save you time and effort. It can also help you to create a more accurate cash flow statement.
Conclusion
A cash flow statement is a valuable tool for businesses of all sizes. It can help you to understand your company’s liquidity and make better financial decisions.
If you are not comfortable creating a cash flow statement from scratch, you can use a cash flow statement template. There are many different cash flow statement templates available online, and you can choose one that is appropriate for your business.
