How to Derive a Cash Flow Statement
Following the influx and outflow of money and understanding a breakdown of finances is an important aspect of running a successful business. The three main forms of financial statements are balance sheets, income statements and cash flow. Most cash flow statements have four main parts: operating activities, investing activities, financing activities and the net increase or decrease in cash. When creating the cash flow statement, separate each source of revenue and each source of cash on its own line and organize the statement according to the four main parts.
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Instructions
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Calculate the net cash flow from your company’s operating activities. Add up the cash receipts from customers and subtract the cash paid to suppliers and employees. Add dividends and interest received. Subtract interest and taxes. For example, assume your business brought in $100,000 in receipts, paid $45,000 to suppliers, brought in $1,000 in dividends and interest and paid $3,000 in taxes and interest. Your business’ net operating activities is $53,000.
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Calculate your net cash flow from investing activities. Total the amount of capital expenditures; represent this figure as a negative number. Capital expenditures may include items such as costs associated with replacing equipment. Add the proceeds of sales and equipment to that number. For example, assume your business spent $10,000 and you brought in $3,000 from proceeds. Your net cash flow from investing activities is negative $7,000, represented as “(7,000).”
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Calculate the cash flow from financing activities. Add together proceeds from capital contributions and loans. Subtract payments on the loan to this amount. For example, if your business brought in $9,000 in capital contributions and loans, but paid $2,000 on the loan, your net cash flow from financing activities is $7,000.
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Calculate the net increase or decrease in cash based on the amounts held at the beginning and end of the accounting period. For example, if your business started with $4,000 in the beginning of the accounting period and had $32,000 at the end of the period, your cash flow increased $28,000.
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