Cash Flow Statements Report
The cash flow statement informs you of how much cash is entering and leaving your business. Besides balance sheets and income statements, it’s one of the three most important financial statements for managing a small business accounting and making sure enough cash is available to keep operating.
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What is a Cash Flow Statement?

It can be defined as a regular financial statement telling you how much cash you have on hand for a specific period of time. Income statements are excellent for showing you how much funds you’ve spent and earned. However, they don’t necessarily tell you the cash figure you have on hand for a specific period of time.

In an accrual basis accounting, income and expenses are recorded when they are earned or incurred—not when the money outflows or inflows through your main bank account. A cash accounting method only records money once you have it fixed.

Thus, even if you see income reported on your income statement, you may not currently have the cash from that income. Cash flow statement makes adjustments to the information recorded on the income statement, so you see your net cash flow—the precise amount of money you have on hand for that time period, it also provides a direct overview of transactions analysis.
Why do You Need Cash Flow Statements?

By using accrual accounting, cash flow statements are essential for three reasons:

  1. They show your liquidity. This means you know exactly how much operating cash flow you have in case you need to use it, so you know what you can afford, and what you can’t.
  2. They show you changes in assets, liabilities and equity in the forms of cash outflows, cash inflows, and cash being held. Furthermore; those three categories are the core of any business accounting. They form the accounting equation that lets you measure the company finance performance and capital management.
  3. They let you predict future cash flows. It can be used to create cash flow projection, so you can plan for how much liquidity your business will have in the future to help with financing quick purchases. It's important for making long term business plans.
Image Image
The cash flow statement informs you of how much cash is entering and leaving your business. Besides balance sheets and income statements, it’s one of the three most important financial statements for managing a small business accounting and making sure enough cash is available to keep operating.
Image
What is a Cash Flow Statement?

It can be defined as a regular financial statement telling you how much cash you have on hand for a specific period of time. Income statements are excellent for showing you how much funds you’ve spent and earned. However, they don’t necessarily tell you the cash figure you have on hand for a specific period of time.

In an accrual basis accounting, income and expenses are recorded when they are earned or incurred—not when the money outflows or inflows through your main bank account. A cash accounting method only records money once you have it fixed.

Thus, even if you see income reported on your income statement, you may not currently have the cash from that income. Cash flow statement makes adjustments to the information recorded on the income statement, so you see your net cash flow—the precise amount of money you have on hand for that time period, it also provides a direct overview of transactions analysis.
Image
Why do You Need Cash Flow Statements?

By using accrual accounting, cash flow statements are essential for three reasons:

  1. They show your liquidity. This means you know exactly how much operating cash flow you have in case you need to use it, so you know what you can afford, and what you can’t.
  2. They show you changes in assets, liabilities and equity in the forms of cash outflows, cash inflows, and cash being held. Furthermore; those three categories are the core of any business accounting. They form the accounting equation that lets you measure the company finance performance and capital management.
  3. They let you predict future cash flows. It can be used to create cash flow projection, so you can plan for how much liquidity your business will have in the future to help with financing quick purchases. It's important for making long term business plans.
Where do Cash Flow Statements Come From?
It is possible to calculate cash flow statements each month based on the information of your income statements and balance sheets.
An accounting software can be used to create cash flow statements based on information you’ve already entered in the general ledger. These services are provided by us in an obligation with complete privacy to your company earnings. A simple accountant worksheet may also display the different revenues from sales to customers but it is typically calculated as one sum and not categorized in the required fashion.

With both those methods, the cash flow statement is only accurate so long as the rest of the bookkeeping is accurate too. Working with InTune Outsourcing is the most surefire way to know how much working capital you have. We will make sure everything adds up, so your cash flow statement always gives you an accurate and quality result.
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The Important Items on the Cash Flow Statement

The important note on the cash flow statement is the bottom-line item. It is likely to be the "net increase/decrease in cash and cash equivalents." A bottom line reports the overall change in the company's gross cash and its equivalents (the assets like shares and dividend that can be immediately converted into cash) over the last period. Included under current assets on the balance sheet, you will find cash and cash equivalents (CCE or CC&E). The difference between the current CCE and that of the previous year or the previous quarter, you should have the same number as the total number at the bottom of the statement of cash flows.
Negative Cash Flow vs. Positive Cash Flow

Sometimes the cash flow statement shows a negative number at the bottom, that means money was lost during the accounting period—which translates to negative cash flow. It’s important to remember that, long-term, negative cash flow isn’t always a bad thing. In some months you may spend cash in order to make money later on—having investments in equipment or property, for example. A positive number at the bottom of the statement indicates positive cash flow for the month. Positive cash flow however, isn’t always a good thing in the long term. It gives you more liquidity for now but there are negative reasons you may have that money—for instance, by taking on a large loan to bail out your failing business forcing you to fall in debt later.
Image
It is possible to calculate cash flow statements each month based on the information of your income statements and balance sheets.
An accounting software can be used to create cash flow statements based on information you’ve already entered in the general ledger. These services are provided by us in an obligation with complete privacy to your company earnings. A simple accountant worksheet may also display the different revenues from sales to customers but it is typically calculated as one sum and not categorized in the required fashion.

With both those methods, the cash flow statement is only accurate so long as the rest of the bookkeeping is accurate too. Working with InTune Outsourcing is the most surefire way to know how much working capital you have. We will make sure everything adds up, so your cash flow statement always gives you an accurate and quality result.
Image
The Important Items on the Cash Flow Statement

The important note on the cash flow statement is the bottom-line item. It is likely to be the "net increase/decrease in cash and cash equivalents." A bottom line reports the overall change in the company's gross cash and its equivalents (the assets like shares and dividend that can be immediately converted into cash) over the last period. Included under current assets on the balance sheet, you will find cash and cash equivalents (CCE or CC&E). The difference between the current CCE and that of the previous year or the previous quarter, you should have the same number as the total number at the bottom of the statement of cash flows.
Image
Negative Cash Flow vs. Positive Cash Flow

Sometimes the cash flow statement shows a negative number at the bottom, that means money was lost during the accounting period—which translates to negative cash flow. It’s important to remember that, long-term, negative cash flow isn’t always a bad thing. In some months you may spend cash in order to make money later on—having investments in equipment or property, for example. A positive number at the bottom of the statement indicates positive cash flow for the month. Positive cash flow however, isn’t always a good thing in the long term. It gives you more liquidity for now but there are negative reasons you may have that money—for instance, by taking on a large loan to bail out your failing business forcing you to fall in debt later.
Every SME Can Become Large
InTune Outsourcing - Creating Financially Driven Businesses and Entrepreneurs.
Every SME Can Become Large
InTune Outsourcing - Creating Financially Driven Businesses and Entrepreneurs.

About InTune Outsourcing Services

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InTune Outsourcing was founded in 2007 as an outsourcing and business consultancy firm geared to the needs of small and medium sized enterprises.

Find Out More About Us


About InTune Outsourcing Services

Quick Link

Facebook


InTune Outsourcing was founded in 2007 as an outsourcing and business consultancy firm geared to the needs of small and medium sized enterprises.

Find Out More About Us


About InTune Outsourcing Services


InTune Outsourcing was founded in 2007 as an outsourcing and business consultancy firm geared to the needs of small and medium sized enterprises.

Find Out More About Us

Facebook