How to Understand a Cash Flow Statement

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A cash-flow statement records received cash and subtracts all cash that goes out of the business. Understand cash-flow statements with tips from a certified adviser on small business in this free instructional video on starting a business.

Part of the Video Series: Business Advice
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Video Transcript

This segment is devoted to how to read a cash flow statement. A cash flow statement will help you to determine what is coming in, and what is going out. A cash flow statement is similar to a business checking account, in that it's going to record the cash that you receive, and then subtract all cash that goes out of the business. This way, you will know what your cash position is at the end of each month. A cash flow statement is also important, because it helps to project cash requirements for future expenses, while detailing sales needed, to break even on a monthly basis. While expense categories may differ between businesses, the premise is always the same, how much cash is coming in, and how much cash is going out.


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