A cash flow statement is an important tool for managing money because it shows how much cash is coming into and going out of a business. Along with the income statement and the balance sheet, this statement is one of the three main reports that are used to figure out how well a company is doing.
What is included in a cash flow statement?
Cash Generated through Operational Activities. It is a section of a company’s cash flow statement that reflects the amount of cash that a company creates (or spends) as a result of carrying out its operating activities over the course of a certain amount of time.
Examples of Operational Activities are:
- Sales cash
- Payments to suppliers
- Loan interest
Cash Generated through Investment Activities. Any and all sources and uses of cash derived from a company’s investments are considered to be investing activities. This list includes anything that has to do with mergers and acquisitions (M&A), such as the buying or selling of assets, the giving or receiving of loans, and any other payments associated with those transactions. In a nutshell, fluctuations in investment cash flow are related to changes in equipment, assets, or investments.
Examples of Investing Activities are:
- Buying fixed assets
- Buying stocks or securities
- Lending money
- Sale of fixed assets
- Sale of investment securities
- Paid back loans
- Insurance payout
Cash Generated from Financing Activities. The net cash inflows and outflows used to finance a business are shown in a company’s cash flow from financing activities (CFF), which is a subset of the cash flow statement. A company’s financial health and the efficiency with which its capital structure is managed can be gauged by looking at the cash it generates from its financing activities.
Examples of Financing Activities are:
- Stock repurchase
- Money collected from long-term debt
- Long-term debt payments
- Dividend payments
A cash flow statement can help you assess your company’s financial stability, profitability, and future growth. It is used to figure out if a company has enough cash or liquidity to pay its bills and to make predictions about its future cash flow, which is helpful for budgeting.
How can BashoffCFO help
BashoffCFO uses its own cash flow management system to look into every part of your business and give you strategies and tactics that will turn your company into a high-performance cash flow machine. Let’s get started today! or call us at 410-952-6767 for a free consultation.