2. 1. What a cash flow statement is
2. How to prepare a Cash Flow
Statement
3. What Your Cash Flow Statement
says about your business
Today, we’ll learn:
15. The Cash Flow statement is the one
financial statement prepared strictly on a
cash basis and lets you know how much
liquid cash your company is making.
16. “As the number of corporate
failures has risen, there is one
line that bankers continue to
echo: it is not a fall in profits
that leads to failure, but a lack
of cash.”
Source: The Financial Times
17. “In too many situations,
companies and their investors
have been focused on profits,
but in an environment where
liquidity is tight and confidence
thin, cash is king.”
Source: The Financial Times
20. Operating activities in cash
flow arise from normal
business operations such as
revenues and cash operating
expenses after taxes.
21. Operating activities that create
cash outflows include payments
by suppliers, payment to
employees, interest payments,
and payment of income taxes.
22. Cash inflow (+)
• Payment for services rendered
• Payment from customers
Cash outflow (-)
• Payments to suppliers
• Payments to employees
• Payments to government
• Payments to lenders
• Payments for other expenses
25. Cash inflow (+)
• Sale of property, plant and equipment
• Sale of debt or equity securities (other
entities)
• Collection of principal on loans to other
entities
Cash outflow (-)
• Purchase of property, plant and
equipment
• Purchase of debt or equity securities
(other entities)
• Lending to other entities
28. For example: If you borrow funds to
purchase equipment or pay off a
loan, the cash flow statement will
enable you to determine how much
cash was either generated or used as
a result of those transactions
31. 1. There will be a starting balance of
cash at the beginning of each period
2. You will have increases or decreases
in cash via operations; the company
made or lost money on the core
business
3. The company will use cash
throughout the year to pay for things
i.e. new assets
4. Some companies may choose to raise
additional cash throughout the year
32. + Cash Flows from Operating Activities
+ Cash Flows from Investing Activities
+ Cash Flows from Financing Activities
= Increase OR Decrease in Cash (Ending)
+ Beginning Cash Balance
= Ending Cash Balance
43. Try and collect payment from
customers more quickly. This can help
you avoid long gaps and avoid
transactions dragging on.
44. Attempt to reduce monthly expenditure.
Buy supplies in bulk to get a discount, buy
from a more competitively priced supplier,
rent smaller premises, switch utility
companies to reduce monthly outgoings –
anything!