For the successful running of a business, knowing the inflows and outflows of cash is paramount. By assessing the amount that comes to the company and is spent on its maintenance, accountants get insights into your company’s finances. Therefore knowing the cash flow statement is very crucial for any business owner. But what is it?
In this blog, we have got you covered.
What is a Cash Flow Statement
A Cash Flow Statement is a crucial financial statement that reveals how much cash comes and is spent in your company. It is the documents that state balance sheets and income statements of the company, giving you insights into your business finances.
The statement is prepared at the end of the fiscal year and shows the inflows of the company from various operations and external investments, along with the outflows that are paid for the maintenance of the company. Divided into three segments, the Cash Flow Statement shows what do you add back in to cash flow statement, like cash flow from operations, investment, and other financial activities.
Investors, creditors and other interested parties utilise this document for assessing the financial condition of the company in a specific period. They assess whether the company has sufficient liquidity to operate regularly.
Wrap Up
The cash flow statement gives detailed information on how the company manages its business finances to run smoothly. Henceforth, the evaluation of the Cash Flow Statement is very crucial for any business that reveals the true cash position of the company.
