ArticlesBase.com - Free Articles Directory
Free Online Articles Directory
08.10.2008 Sign In Register Hello Guest
Email:
Password:
Remember Me 
forgot your password?


How to Monitor Your Cash Flows With A Cash Flow Statement

Author: Wade Anderson Author Ranking Blue | Posted: 23-09-2006 | Comments: 0 | Views: 218 | Rating:  (54) Article Popularity - Blue (?) Got a Question? Ask.
Sign Up Now!

A cash flow statement is a financial reporting document displaying the cash outflows and inflows of a company on a monthly or quarterly basis. This report reflects the effects of changes to the balance sheet and income accounts on the cash position as well as analyzing the operating, investing and other financial aspects of the company. When analyzed, the cash flow statement helps assess the short term capability and practicality of the company as to whether it will be able to fulfill its obligations to pay its bills or not.

Those who may be interested in studying the cash flow statement include:

-The accounting department
-Creditors and other lenders who need to assess the repayment capability of the company
-Investors who will judge whether the company is economically sound and viable
-Contractors and would-be employees who need to know whether the company will be able to fulfill its financial obligations

Companies that have limited fluid assets and which are just beginning operations are most in need of cash flow statements because they may be vulnerable and may experience cash shortfalls in spite of having healthy Accounts Receivables balances.

It is important to design a good cash flow statement that will translate the accrual basis of preparing an income statement as well as the balance sheet back into cash basis. The importance of this method is underscored when considering the fact that cash basis statements help in analyzing the actual amounts of cash flowing in and out of the business. Though the accrual basis may accurately reflect the company revenue and expenses the cash flow statement will additionally map out what happens when changes to the balance sheet are made. There are four different kinds of cash flow statements:

-Net cash flow statements that reflect operating activities. The generation of cash inflows and outflows that reflect the daily operating behavior of the business and includes cash received from customers, cash paid to suppliers and employees, and operating expenses, interests as well as taxes, and cash income received from dividend payouts.
-Net cash flow statements pertaining to investing activities. Mainly reflects the sale or purchase of equipment.
-Net cash flow from financing actions. Inclusive of common stock, short or long term loans changes as well as paid out dividends.
-Net changes in cash as well as marketable securities. To check whether the calculated amounts of increases or decreases in cash and marketable securities as arrived at from the above three points are in tune with those reflected in the balance sheet to help ascertain if the calculations were correctly made.

Though there are a number of different people interested in viewing the cash flow statement, each wanting their own perspective of the business, this financial statement is most important to management, lenders, tax officials and investors. The importance of this report is that it reveals the entire picture about the business and this is very helpful as it will reveal whether the business has enough cash or not to meet its obligations.

With cheap cash flow statement documents being available for as low as US$10 it is indeed a bargain to purchase one and use it for one's business instead of going through the hassles of preparing one from scratch. These prepared documents usually take into account the various needs of different businesses and can also be tailor-made to suit individual needs.

Rate this Article: Current: 0 / 5 stars - 0 vote(s).

Article Source: http://www.articlesbase.com/finance-articles/how-to-monitor-your-cash-flows-with-a-cash-flow-statement-58193.html

Print this Article Print article   Email to a Friend Send to friend   Publish this Article on your Website Publish this Article   Send Author Feedback Author feedback  
About the Author:
Wade Anderson is a CPA and operates DigitalWorkTools.com Legal Forms and Business Documents. Click to view a Cash Flow Statement
Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Comment on this article Comment on this article
Your Name
Your Email:
Comment Body
Enter Validation Code: Captcha


Related Articles

How to Create a More Positive Cash Flow
By: Terry H. Hill | 10/03/2008 | Small Business

Trying to Keep a Good Cash Flow
By: Usha Pradhan | 07/07/2008 | Loans

Personal Finances - Getting Off the Paycheck to Paycheck Roller Coaster
By: George Gilbert | 13/08/2007 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

Safeguard Your Assets by Allocating Returns
By: Chad Sunyich | 16/07/2008 | Investing

What to Do in a Cashflow Crunch
By: Chad Sunyich | 01/09/2008 | Investing

Cash Flow Rules!
By: Cash Miller | 21/05/2008 | Business
Business Articles, learn about busines - An organization created with the objective of making a profit from the sale of goods or services.

Personal Finances - How I Achieved More Money Than Month
By: George Gilbert | 13/08/2007 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

Two Ways to Instantly Increase Cash Flow
By: Chad Sunyich | 03/09/2008 | Credit

Got a Question? Ask.

Ask the community a question about this article:

Frequently Asked Questions

Funndraiser For Family Of Mark Kisner
By: Haigie Zenia | 10-09-2008
www.floridalegion.org/

I have opened an account in SBI.It the amount in ...
By: lanu | 10-09-2008
i have opened an account in SBI.It the amount in my account exceeds 15000 the excess amount is going into debit sweep and i want to know how can i check how much amount is remaining in my account after every transaction?

How to get on the government bailout list...
By: Jane Logan | 09-09-2008
How do I get on the "government bailout" list. I could use some cash myself... Jane Logan, Sandwich, MA

Ira plan plus other stock plans. is it possible to ...
By: zeke | 09-09-2008
ira plan plus other stock plans. is it possible to just roll them over into reducing my mortgage?

My school has a surplus of my pal grant money left ...
By: mitchmi77 | 08-09-2008
my school has a surplus of my pal grant money left over . all my school has been paid for fall.will i get acheck from school for whats left. thanks dm

Lost income
By: Susan A Fourroux | 08-09-2008
can a self-employed person get compensation for lost income during the storm and its aftermath?

Q&A Powered by:
Powered by Yedda 

Latest Finance Articles

Stock Market Advice - Be Careful Who You Listen To
By: Bruce Lipski | 08/10/2008
You can get stock pics almost everywhere including magazines, TV shows, radio shows, The Internet and probably many other places as well. One thing is for sure, there is no shortage of opinions.

Learning Proper Money Management For College Students
By: Jamie B. McIntyre | 08/10/2008
It is tempting for college students to just throw caution to the wind and enjoy life as it comes. I mean, you are only young once and there are so many things to enjoy while you at that age when you are totally energetic and feeling full of excitement and...

Off Shore Incorporation In Ras Al Khaimah Is The Quickest In The Middle East
By: Ramapati Singhania | 08/10/2008
Off shore incorporation in Ras Al Khaimah [RAK], one of the fastest growing emirates in one of the fastest growing economies of the world - the United Arab Emirates [UAE] is the easiest to do in the Middle East.

BVI Offshore Registration: All That You Need To Know To Get Started
By: Ramapati Singhania | 08/10/2008
BVI offshore registration is certainly cheaper than Lichtenstein or Luxembourg and extremely popular. More than 6,500 companies are incorporated in this jusrisdiction every month!

The History of the Global Forex Market
By: Orlando Thompson | 07/10/2008
In this article we explain what the global forex market is and how it came to be this is very insightful information that will help you in your forex trading system choices.

How To Go About Improving Your Credit Score
By: MIKE SELVON | 07/10/2008
While it'd be nice to live a "credit-free existence," it can be difficult to do so in today's world.

Self Directed IRA Possibilities With A Small Business
By: Jerry Glynn | 07/10/2008
It is normally not possible to set up a self directed IRA with a small business. This article describes a little known strategy that can be used in conjunction with a small business.

Understanding Debt Consolidation Loans
By: Richard Greenwood | 07/10/2008
It can be all too easy to end up in debt and especially during the current times of financial uncertainty you may find yourself unable to make repayments. Consolidating your debt can make your debts easier to manage and lower your interest charges meaning you become debt free faster.

More from Wade Anderson

How To Use Available Legal Forms
By: Wade Anderson | 16/11/2007 | Law
The use of legal forms is necessary in most business environments and varies according to the purpose for which they are intended. Using legal forms is beneficial to both small as well as large companies.

Give Your Customers The Credit They Deserve, Use A Credit Application
By: Wade Anderson | 23/09/2006 | Finance
One of the best ways to increase sales is to extend credit terms to your business customers. Companies that extend credit have an average of 37% higher revenues than companies that do not. Extending terms to your customers allows them to be flexible with their payments and pay you in accordance with their individual cash flows.

How To Generate Pro Forma Financial Statements For A Company
By: Wade Anderson | 28/07/2006 | Finance
Many companies generate and keep historical financial statements, but very few develop a working set of pro forma financials. Pro Forma financial statements are designed to give you a look at the projected, future financial statements of a company.

How To Use Purchase Orders To Track Purchases
By: Wade Anderson | 28/07/2006 | Finance
Without the use of purchase orders within an organization expenses can quickly get out of control. The use of such a form allows you to know exactly what is purchased when and by whom.

How To Use A Request For Proposal To Get Exactly What You Want
By: Wade Anderson | 28/07/2006 | Law
Define exactly what it is you want before you actually sign a contract with a vendor or supplier. Documenting and submitting a request for proposal will help ensure that what you are getting is exactly what you want. RFPs also help streamline the management process by which bids are reviewed, priced, and ultimately selected.

How To Achieve Better Loans With A Quality Loan Application
By: Wade Anderson | 26/07/2006 | Law
The quality of a loan, for both the lender and borrower, is directly affected by the quality and completeness of he loan application itself. Interest rates, duration, fees, and other aspects of the loan are all directly related to the form itself.

Are Your Shipments Accompanied By A Proper Bill of Lading?
By: Wade Anderson | 26/07/2006 | Law
Shipping, it's how goods get from one place to another. A bill of lading is an essential document to the transport of goods; documenting the specifics, measurements, and values of the cargo as it travels from one shipping point to the next.

What Makes A Good Employment Application And Why Is It Important?
By: Wade Anderson | 26/07/2006 | Careers
The best way to weed through a stack of potential candidates for any position is the use of a professional quality employment application. This document will also gather all important information on candidates on one single form.

Article Categories






Give Feedback

Sign up for our email newsletter

Receive updates, enter your email below