Cash Flow Statement Instructions
A cash flow statement is a financial report that reflects the amount of cash a business earns and spends during a specific period. A business can use such a statement to show the flow of cash in its operating, investment and financing activities. By using an operational cash flow statement, individuals can see if the earnings generated from operating activities are greater than the business' net income. An operating cash flow statement is the most important cash flow statement regarding a company's financial health because it is hard to manipulate the figures used and you get a good idea about your business' bottom line, according to Rick Wayman, writing for "Forbes" magazine.
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Instructions
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1
Create 15 columns on a piece of paper.
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2
Label the columns. Starting with the second column, write the word “Start-up.” Label the last column “Total.” Label the columns between “Start-up" and “Total” with the months of the year, beginning with month the business started. You will use the first column to create labels for the rows of your cash flow statement.
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3
Label the rows, beginning with the second one down, “Starting Cash Balance,” “Income/Cash Flow,” “Available Cash Balance,” “Expenses/Cash Outflow,” “Loan Uses,” “Total Cash Outflow” and “Ending Cash Balance.”
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Fill in the “Beginning Cash Balance” row. If you have a new business, enter zero under the “Start-up” column. Otherwise, enter your business’ current cash balance in the column that matches your current month.
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5
Create the following sub-rows under the “Income/Cash Flow” row: “Sales,” “Accounts Receivable Collections,” “Cash in Form,” “Owner’s Investment,” “Loan Proceeds” and “Total Cash Inflow.” Fill in each area as necessary under the appropriate column. Write the amount of money received from actual cash receipts in the “Sales” sub-row. In the “Accounts Receivable Collections” sub-row, write in the amount of money you expect to receive from sales you made. Enter the amount you invested in the “Owner’s Investment” sub-row. In the “Loan Proceeds” sub-row, enter the amount of cash you used from a business loan.
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6
Add the figures you entered in the “Income/Cash Flow” sub-rows and enter the sum in the “Total Cash Inflow” row.
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Create the following sub-rows under the “Expenses/Cash Outflow” row: “Inventory Purchases,” “Total Cash Operating Expenses,” “Loan Payments,” “Capital Purchases” and “Owner's Draw.” Enter the money you spent on merchandise in the “Inventory Purchases” sub-row under the appropriate column. In the “Total Cash Operating Expenses” sub-row, write in the sum of your variable, periodic and fixed monthly operating expenses under the appropriate month. In the “Loan Payments” sub-row, enter the amount of money you paid toward loans, including interest. Use the “Capital Purchases” sub-row if you plan to purchase an expensive item for your business by entering the cost of the product under appropriate column. In the “Owner’s Draw” sub-column, enter the amount of cash you withdrew for personal expenses.
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8
Enter the amount of money spent on start-up costs under the correct columns in the "Loan Use" row. These costs can include the cost of the building, initial inventory and equipment.
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Add the figures in the “Expenses/Cash Outflow” and “Loan Use” rows in the same monthly column. Enter the sum in the “Total Cash Outflow” row under the same monthly column.
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10
Subtract the figure in the “Total Cash Outflow” row from the figure in the figure in the “Total Cash Inflow” row of the same month. Write the answer in the “Ending Cash Balance” row to learn the cash flow amount for the month.
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References
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