Cash flow statement

The Cash Flow Statement is one of the main accounting tools for companies, as it allows you to analyze and control the financial movement of an organization in a given period of time. This demonstration is fundamental for financial management and strategic decision-making. The Cash Flow Statement presents the company's cash inflows and outflows, showing how cash has been affected by operating, investing, and financing activities. It is divided into three main parts: cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. In the cash flow from operating activities, transactions related to the company's main activity are recorded, such as sales of products or services, receipts from customers, payments to suppliers, wages, taxes, among others. This portion of the statement shows whether the company is generating cash from its operations or whether it is having financial difficulties. Cash flow from investment activities records transactions related to the purchase and sale of fixed assets, such as machinery, equipment, real estate, investments in companies, among others. This part of the statement allows you to assess whether the company is investing appropriately and whether the investments are generating a financial return. Finally, the cash flow from financing activities records transactions related to raising financial resources, such as loans, financing, issue of shares, payment of dividends, among others. This part of the demo allows you to analyze the company's capital structure and its ability to finance itself. The Cash Flow Statement is important because it assists in analyzing the company's liquidity, that is, its ability to pay its short-term obligations. In addition, it allows identifying whether the company is generating enough cash to invest in its growth and whether it is managing to finance itself adequately. To prepare the Cash Flow Statement, it is necessary to use the information contained in the Balance Sheet and Income Statement for the Year. It is important to note that this statement must be made in accordance with current accounting standards and be audited by a qualified professional. In short, the Cash Flow Statement is an essential tool for the financial management of companies, allowing for a detailed analysis of cash flow and helping to make strategic decisions. It is essential that managers are aware of this statement and know how to interpret its results to ensure the financial health and success of the business.

Next page of the Free Ebook:

10Statement of changes in equity

2 minutes