As a business owner, you know that there are important financial statements that you have to stay on top of for bookkeeping reasons. Not only are they helpful when it comes to accounting, these statements are valuable for a number of reasons. Today, we would like to shed some light on what a cash flow statement is. Mark Dicus & Company is here to talk about cash flow statements and why this is such an important document for your business.
What is Included in a Cash Flow Statement
The goal of a cash flow statement is to show how your business spends its cash. There should be a clear picture of money coming in as well as going out of the business. Here is a closer look at the specifics that you will find in a good cash flow statement:
– Operating Activities: This portion of the statement is similar to an income statement in the fact that it shows the accounts receivable and payable, inventory, wages, and income taxes.
– Investing Activities: In this portion you will see the business’s long term investments or sales like properties, buildings, vehicles, furniture and equipment. You will see the company’s assets right here.
– Financing Activities: You will see all the transactions from long term liabilities and stockholder equity accounts, like dividend payments, notes payable, and retained earnings. It reflects the company’s net cash flow.
Importance of Cash Flow Statements
Cash flow statements can be incredibly helpful in helping a business navigate their finances. Here are some of the ways it can be beneficial.
– Insights: As a business owner, you need to have a clear picture of the ways that your company is spending money. The cash flow statement will give you a precise picture of what the outflow of cash looks like.
– Short-Term Planning: Cash flow statements help give you the picture you need for short-term planning. You need to make sure that you’re meeting all of your obligations and staying solvent.
– Know Your Cash Balance: Every business owner needs to have a clear understanding of how much money it takes to keep the business afloat. The cash flow statement can give you this bottom line.
– Increase Cash Flow: When you have a good understanding of your inflow and outflow of cash, you can more effectively make plans to increase your cash flow.
– Long-Term Planning: Having an accurate cash flow statement can help you with financial forecasting for the future. It helps business owners prioritize certain activities.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
Sometimes, for business owners, financial statements can be overwhelming to put together. If this is the case for you, you can turn to Mark Dicus & Company to take care of it for you. We don’t only take care of your accounting needs, but we also offer bookkeeping services to help your business find success. Call us today!