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A cash flow statement is a document that shows the cash - including money from investments and convertible assets - moving in and out of a business, broken down by its source. This is used to make sure a company has enough cash to meet its day to day expenses, and to project how cash flows in future may shape up.
A cash flow statement - which is also called a statement of cash flows - is used alongside a company balance sheet and income statement to review the financial performance of a business. These 3 key financial statements are used by investors and business owners to manage and improve the profitability of their business.
Cash flow statements are also used when a business is looking for investment or a loan, to demonstrate the company is delivering a profit and using income wisely.
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This simple cash flow statement template is for small-business owners and entrepreneurs who need an example of standard formatting for a statement of cash flows. Customize the categories used to suit your needs.
You can use the indirect method to create the statement of cash flows from the information in the balance sheet and income statement.
A standard format cash flow statement uses three main categories to show cash flows in and out of the business.
Operating Activities: Operating activities include buying and selling inventory, paying salaries for your staff,
and covering operating expenses like rent, rates and utilities for your business property. The operatingactivities section of a statement of cash flows is associated with both the current assets and current liabilities
as listed on the balance sheet, and the revenue and expenses as shown on the company income statement.
Investing Activities: The investing activities listed can be seen to relate to the long-term assets section of the
company balance sheet. Here you’ll find things like buying and selling property and machinery, lending moneyand buying or selling long term tradable assets like equities.
Financing Activities: Financing activities include taking and repaying loans, issuing stock and paying dividends,
seeking investment and stock buy-back programs. This section can be associated with information on long-term liabilities and owners'/stockholders' equity which is captured on the balance sheet.
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