Get Cash Flow Statement Homework Help and finance homework help from TutorChrome finance tutors
Cash Flow
Cash flow is the most important element of the accounts of any business. It can be either positive or negative, which is obviously a most undesirable solution.
Cash flow in general terms means the movement of the money from where it comes in for the business and how it goes out of the business i.e the expenditure or expenses made in the business. Cash flow can happen in business, projects or financial products.
Cash flow statements show the amount of the cash generated and used by the company in a given period. The given period usually a span of one year It is measured for a given period of time. The measurement of the cash flow can be used for calculating other parameters like Rate of Return, Net Present value(NPV), business’s liquidity, profits of the company and to evaluate the risks.
Cash flows can be referred for the actual past flows or to project the future flows. It involves the cash flow, operating cash flow and free cash flow.
Cash inflows in the statement arise from three different activities – financing, operations or investing. Also, it occurs as a result of donations or gifts in the case of personal finance. Cash Outflows results from the expenses or investments.
It is for both the personal finance as well as the business. The amount of the cash is calculated by adding noncash charges such as depreciation to net income after the payment of taxes. Cash flow is used as an indication of a company’s financial strength.
Cash flow statements are used records of something which has been happened in the past, such as the sale of the product, or forecasted in future, the expenses and profits.
The cash flow statements are often used by the analysts to determine the financial performance of the company. Companies having the plentiful amount of cash in hand are able to invest the cash back into the business in order to generate more profit and cash.
Cash flow statement administrates the explanation that how the firm’s cash position has changed between the successive balance sheet dates and it explains the changes that have taken place in the firm’s non-cash assets, liability and stock holder’s equity accounts over the same period of time.
