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 assess a company’s liquidity, solvency, and financial health. Startups, in particular, need to pay close attention to their cash flow to ensure they have enough cash on hand to cover their expenses and continue operating.
There are many different cash flow statement formats, but the most common is the indirect method. This method starts with net income and then adds back non-cash expenses and subtracts non-cash income to arrive at cash flow from operating activities. Cash flow from investing and financing activities is then added to or subtracted from cash flow from operating activities to arrive at net cash flow.
Importance of Startup Cash Flow Statement
A startup cash flow statement template is a tool that can help startups track their cash flow and make informed financial decisions. By using a cash flow statement template, startups can:
- Identify sources and uses of cash
- Forecast future cash flow needs
- Make informed decisions about how to allocate cash
- Avoid financial distress
Startups should prepare a cash flow statement on a regular basis, such as monthly or quarterly. This will help them stay on top of their cash flow and make necessary adjustments as needed.
Using a Startup Cash Flow Statement Template
There are many different startup cash flow statement templates available online. Startups can choose a template that meets their specific needs. Once a template has been selected, startups can follow these steps to create a cash flow statement:
- Gather financial data from the income statement and balance sheet.
- Enter the data into the cash flow statement template.
- Calculate cash flow from operating, investing, and financing activities.
- Add or subtract cash flow from investing and financing activities to arrive at net cash flow.
Startups should review their cash flow statement regularly and make necessary adjustments to their financial plan as needed.
Conclusion
A startup cash flow statement template is a valuable tool that can help startups track their cash flow and make informed financial decisions. By using a cash flow statement template, startups can identify sources and uses of cash, forecast future cash flow needs, and make informed decisions about how to allocate cash. Startups should prepare a cash flow statement on a regular basis to stay on top of their cash flow and make necessary adjustments as needed.
By following these tips, startups can use a cash flow statement template to improve their financial health and increase their chances of success.
