“A cash flow statement is a financial statement that measures the cash generated or used by a company in a given period. It typically sets out a company's cash sources and uses for the period into three categories: cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities.” Investing Answers
The cash flow statement (sometimes called the 'statement of cash flows') reflects the actual amount of money the company receives from its operations. It reports on the cash coming in and going out during the time interval specified in its heading (for instance, the heading may state "For the Three Months Ended June 30, 2018" or "The Fiscal Year Ended December 31, 2017"). That time period is chosen by the company.
Read the following texts:
- Cash Flow Statement by Entrepreneur.
- Analyze Cash Flow The Easy Way by Investopedia.
- Sample Cash Flow Statement by Nolo. An excellent worked example of a cash flow forecast or projection. This can help you look ahead and see when there may be challenges with cash flow, so that you can plan in advance (for instance, by thinking about reviewing the terms of any credit sales)
WEnote
Thinking about your own entrepreneurial idea, create a spreadsheet (like the example in number 3 above) and examine your "Cash at End of Month" over the year.
Do you foresee any months where your cash flow will go negative? What could you do to correct this?
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