Business Cash Flow Statement
What it is and why it’s important to small business owners.
A Cash Flow Statement is a financial report that details the amount of cash and cash equivalents that enter and exit a company over a specified time period. The Cash Flow Statement is broken up into operating, investing and financing activities.
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How it is Used
A Cash Flow Statement is used to understand how a company spends its money and where this money comes from. It is determined by three main components of what the cash is used for: operations, investing and financing.
Operating activities’ inflows and outflows of cash show how much cash is generated based on a company’s services or products.
Additional Information
The Balance Sheet, Income Statement, Statement of Retained Earnings and Cash Flow Statement are all interrelated. These four financial statements are prepared in the following order: Income Statement, Statement of Retained Earnings, Balance Sheet and Cash Flow Statement. The Cash Flow Statement for a period of time should equal the cash increase or decrease between the last and current balance sheet of time periods.
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