Statement of Cash Flow: Every business owner should also have a statement of cash flow for their business prepared at least monthly, along with their income statement and balance sheet.
The Statement of cash flow reports cash flow generated over a period of time in each of the three key activities of a business: investing, operating and financing activities.
While each financial statement provides unique information of use for analysis and decision-making, the statement of cash flow provides particular insight into that most vital commodity – cash.
Every business owner should develop a good understanding of basic cash flow principles and then analyze the various areas that affect the timing of cash inflows and outflows in your business.
A good analysis of these components will point out problem areas that lead to cash flow gaps in your organization. With this information, you can develop a cash flow plan to help you foresee the needs of capital, along with identifying potential sources of operating capital that can help you fund the ongoing activities and needs of your business.
Read and reread this. Keep a copy on your desk and never forget: “Cash is King”.
If you would like to learn more about maximizing the performance of your business call Ohio business coach Ralph Berge, 440-838-0991, Business Coach of Akron Canton.
