We have been taking a closer look at some of the financial statements that keep a business going strong. Today, we would like to look at another one known as the cash flow statement. It is important to know and understand what is found in this important document so that your business can thrive. Propel Your Accounting is here to help everyone understand what should be found in a cash flow statement as well as explain why the cash flow statement is such an important document.
What You Can Find in a Cash Flow Statement
Knowing how your business spends money is vital to staying solvent. The last thing that any business wants is bankruptcy. Here is some of the information that can help to avoid it:
– Operating Activities: This portion of the document twill be focusing on the business’s main activities. This will be things like buying or selling merchandise and the services that they offer.
– Investing Activities: To have a clear picture of a company’s assets, you can look at the investing portion of the cash flow statement. You will be able to see whether or not a business has purchased or sold investments like property, buildings, vehicles, equipment, and furniture.
– Financing Activities: This part of the document will outline all the cash transactions for the business to give you the company’s net cash flow. It takes into stock purchases and debt financing into consideration as well.
How a Cash Flow Statement Benefits a Business
We would like to take a closer look at the ways that your business can benefit from fully understanding your cash flow statement.
– Spending Activities: It is vital that a company has insights into the actual cash your business spent. If you know where you’re spending money, it can help you fully understand the outflow.
– Short & Long-Term Planning: As a business owner, it is important that you don’t only do short-term planning but long-term as well. You need to have short-term goals as well as goals with the end in mind. The growth of your company is determined by how well you set these short and long-term goals.
– Cash Balance: You need to know how much cash it takes for your business to operate. This is one of the most important things that cash flow statement can do for you when it is accurate.
– Increase Cash Flow: When you can see the inflow and outflow clearly, you can strategically see where you can make changes to increase your cash flow in the future.
Bookkeeping, Accounting, Business Consulting & HR / Admin Services in the United States of America
At Propel Your Accounting, we know how important all of these financial statements are. The cash flow statement is one that you want to have a good understanding of because it can help you successfully forecast for the future. We will handle all of your bookkeeping needs to ensure you have the full financial picture you need to successfully run your business. Call us today!
