Online Cash Flow Statement Analysis Lessons
Cash
flow is simply the difference between the money
coming in to a business from all sources and the
money going out of the business. If there's more
money coming in than going out, it's called a
surplus. If there is more going out than coming in,
it's called a deficit.
The
cash flow statement has always been the country
cousin of the other two major financial statements.
Misunderstood and confusing, it can be difficult for
small-business owners to interpret and use.
However,
the cash flow statement tells the story every
business owner wants to hear: "Where did my money
go?" It's the only statement of the three that deals
in cash inflows and outflows. For example, if your
cash balance was $15,000 at the end of last year and
it's $12,000 at the end of this year, you know that
you had net cash outflows of $3,000 for the year.
But where did it go? How did it get there? The cash
flow statement reconciles your opening cash to your
closing cash for the period.
