The direct method is simpler, but if your business is already using an income statement and balance sheet, you’ll want to follow the indirect method. The indirect method works backwards from the income statement and balance sheet to imply your net cash flow. The direct method just adds up all the cash inflows and outflows. There’s two ways of preparing a cash flow statement: the direct method, and the indirect method. (Note: “cash” can mean actual cash, or cash equivalents-liquid assets). The statement is split up into three sections:īetween those three types of transactions, you’ll see every cash transaction that can possibly happen in your business.Ī completed cash flow statement will show your net cash: all your cash inflows and all your cash outflows, whether that’s a positive or negative number.
#CASH FLOWS STATEMENT TEMPLATE FULL#
It’s used together with the income statement and balance sheet to give you a full financial picture of your business.
What is a Cash Flow Statement?Ī statement of cash flows is a financial statement that tells you how much cash you have on hand for a specific period. Our expert bookkeepers here at Bench have built a Cash Flow Statement template in Excel that you can use to analyze your small business cash flow in a specific reporting period.
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