Cash Flow Analysis Techniques and Tips
Two of the financial statements that business firms prepare as part of their monthly accounting cycle are the income statement and statement of cash flows. The income statement shows a firm's profit or net income, while the statement of cash flows shows the firm's cash position.
A company's cash flow at any point in time is the difference between its cash available at the beginning of an accounting period and at the end. The cash includes loan proceeds, investment income, and the sale of assets, and goes out to pay for operating expenses, direct expenses, principal debt service, and the purchase of assets such as equipment. When you operate a small business, cash is king. You can be profitable on paper, but cash poor. If that is your position, you could be in danger of losing your business.
Article Written By: Rosemary Carlson
Original Article Posted on: November 20, 2019
Link to Original Article: https://www.thebalancesmb.com/cash-flow-analysis-393050