Cash Flow

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How to Write a Cash Flow Statement

A cash flow statement is one of a business' main financial statements, along with the balance sheet and income statement. It focuses on the sources and uses of cash through operating, investing and financing activities. Activities that result in the receipt of cash are cash inflows, and activities that result from the spending of cash are cash outflows.

A cash flow statement is divided into three sections:

  • Cash flow from operating activities - cash inflows and outflows resulting from day-to-day business operations, including the collection of cash from sales and payment of expenses.
  • Cash flow from investing activities - result from the purchase or sale of the business's non-current assets, that is, assets owned for longer than 12 months.
  • Cash flow from financing activities - any financing activity that changes the size and composition of the business' long-term financing structure. This includes repayments of the principal on the business mortgage or capital contributions the business owner has made to the business.

You can prepare a Cash Flow Statement for your business by following the strucure below:

(Your business name)
Statement of Cash Flows
For the year ended __ / __ / ____
  $
Cash flow from operating activities  
Receipts from customers 0
Payments to suppliers - 0
Payments to employees - 0
Interest payments - 0
Interest received 0
Taxes paid - 0
Net cash flow from operating activities Total of above figures
   
Cash flow from investing activities  
Purchases of equipment - 0
Purchases of property - 0
Proceeds from sale of equipment 0
Proceeds from sale of property 0
Net cash flow from investing activities Total of above figures
   
Cash flow from financing activities  
Proceeds from borrowings 0
Payments of borrowings (repayment of principal) - 0
Investment into business 0
Drawings from business investment - 0
Net cash flow from financing activities Total of above figures
   
Net increase (decrease) in cash held Total of above 3 total figures
Cash at beginning of period 0
Cash at end of period Net increase   cash at beginning

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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 hereGive Answer