Financial Planning

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A cash flow statement represents the cash inflows and outflows from the business' activities for the reporting period. Cash inflows are all the cash the business receives during the period and cash outflows are all the cash the business expends during the period.

The cash flow statement communicates important information regarding the businesses including:

  • Ability to pay creditors on time
  • Ability to receive cash from debtors on time
  • Ability of the business to generate a positive cash flow (where cash inflows exceed cash outflows)
  • To establish the business's need for external financing.

Cash flow statementWhen the closing balance figure is negative this means that there is a negative cash flow, with cash outflows exceeding the inflow of cash into the business.

To assist you in developing your cash flow statements, you can download the following sample templates:

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Financial Plan

Q.1 Prepare a 12 month and 5 year cash flow statement for your business. To ensure accuracy and consistency, the figures should be taken from your profit and loss statements and balance sheets. You can download sample templates here. Give Answer