What is a Cash Flow Statement?
A cash flow statement is a financial statement that reports on the cash inflows and outflows of a company over a period of time. It is one of the three main financial statements, along with the balance sheet and the income statement. The cash flow statement shows how a company generates and uses cash, and it can be used to assess the company’s financial health.
For nonprofit organizations, the cash flow statement is particularly important. Nonprofits are often reliant on donations and grants to fund their operations, and they need to carefully manage their cash flow to ensure that they have enough money to meet their expenses.
How to Prepare a Cash Flow Statement
The cash flow statement is prepared by using the indirect method. The indirect method starts with the net income from the income statement and then adds back any non-cash expenses and subtracts any non-cash income. This gives you the cash flow from operations.
The next step is to add back any capital expenditures and subtract any depreciation and amortization expenses. This gives you the cash flow from investing activities. Finally, you add back any increases in debt and subtract any decreases in debt to get the cash flow from financing activities.
Benefits of Using a Cash Flow Statement Template
There are many benefits to using a cash flow statement template. First, it can help you to ensure that your cash flow statement is accurate and complete. Second, it can save you time and effort in preparing your cash flow statement. Third, it can help you to better understand your organization’s financial health.
There are many different cash flow statement templates available online. You can choose a template that is specific to your organization’s needs. Once you have chosen a template, you can simply fill in the blanks to create your cash flow statement.
Conclusion
The cash flow statement is an important financial statement for nonprofit organizations. It can help you to assess your organization’s financial health and make informed decisions about how to use your resources. Using a cash flow statement template can save you time and effort and help you to create an accurate and complete cash flow statement.
By following these tips, you can create a cash flow statement that will help you to better understand your organization’s financial health and make informed decisions about how to use your resources.
