Introduction to Cash Flow Statement

Author - Webner
1.03.2019
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Cash Flow Statement
Cash Flow Statement is one of the types of financial reporting statement. Cash Flow Statement includes all the transactions of cash whether it is cash given to others in the form of Cash Disbursements or cash coming from the others in the form of Cash Receipts. All type of inflow and outflow of the Cash transactions are included in the Cash Flow Statement.

 

In Cash Flow Statement cash can be of below categories:-

  1. Hard cash
  2. Cash in Bank Account
  3. Marketable security :- Shares, bonds etc that can be easily converted into cash.

 

Cash Flow Statement includes the transactions related to three activities:-

 

  1. Cash Flow from Financing activities:- This includes all those transaction which are basically used to start a business. To start a business you can receive cash and issue shares, get loan from the banks or other financial organisations. 

Financing activities include:-

    1. Cash Related to Loan:- Anyone who is eligible can get the loan from the bank or other financial organization to start the business. All the payments related to loan are under financing activity whether it is cash you get in the form of loan, repayment of loan, or interest paid.
    2. Cash Related to Shares:- Company can get the cash by selling the Shares. Shares are the owned fund or capital of the company. Any person who buys the shares is the shareholder of the company (Partial Owner). Cash Flow related to Shares like issue of shares, Dividend Payout, or Repayment of Share at the time of winding up is included.
    3. Cash Related to Debentures:- Debentures are the certificates that are used to raise money for the development of the company, for the fixed time period. All the Cash flow related to debenture is a part of the Cash Flow Statement like interest paid for debentures, issue of debenture, redemption of debentures etc.

 

  1. Cash Flow from Investing activities:- After the financial activities, the cash is needed to invest in the fixed asset or long term investment. Investing activities include two main activities:-
    1. Cash Related to Fixed Assets
    2. Cash Related to Long Term Investment

Examples:- Purchase of the building, Sale of the building, Purchase/Sale of long term investment, interest/dividend received from the investment, rent received from the fixed assets like building etc.

 

  1. Cash Flow from Operating activities:- Operating Activities are main business activities like purchase/sales of goods, payment of expenses, payment of taxes etc.

 

Template of Cash Flow Statement:-

 

Cash Flow Statementfor the ended 31th dec 2017
Opening Cash Balance (xxxxxxxxx)
Cash Flow From Operating Activities
(xxxxxxxxx)
(xxxxxxxxx)
(xxxxxxxxx)
Net Cash Flow From Operating Activities (xxxxxxxxx)
Cash Flow From Investing Activities
(xxxxxxxxx)
xxxxxxxxx
(xxxxxxxxx)
Net Cash Flow From Investing Activities (xxxxxxxxx)
Cash Flow From Financing Activities
(xxxxxxxxx)
xxxxxxxxx
(xxxxxxxxx)
Net Cash Flow From Financing Activities (xxxxxxxxx)
Net Increase/Decrease in Cash (xxxxxxxxx)
Closing Cash Balance (xxxxxxxxx)

 

Webner Solutions is a Software Development company focused on developing Insurance Agency Management Systems, Learning Management Systems and Salesforce apps. Contact us at dev@webners.com for your Insurance, eLearning and Salesforce applications.

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