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.
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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