Cash Flow Statement Template

A cash flow statement is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. It provides investors, lenders, and other stakeholders with a clear picture of a company’s liquidity, the efficiency of its cash management, and its viability in the long term.

Structure:

The cash flow statement is typically broken down into three main sections:

Operating Activities: This relates to the primary activities of the business such as receipts from customers, cash paid to suppliers and employees, interest and taxes paid, etc.
Investing Activities: This deals with the acquisition and disposal of long-term assets like property, plant, and equipment, as well as investments not included in cash equivalents.
Financing Activities: This section covers activities related to a company’s capital structure, such as borrowing from banks, repayment of bank loans, issuance and repurchase of company’s own shares, and payment of dividends.

Importance:

It provides insights into a company’s ability to generate cash.
It gives investors a sense of the company’s financial health.
Reveals the sources and uses of a company’s cash.
Helps in evaluating the ability of the company to pay its debts and dividends.
Assists management in planning for future financial needs.

How to Use:

Compare the cash from operating activities to the company’s net income. If the cash from operating activities is consistently higher than net income, it indicates good quality of earnings.
Look at cash flow from investing activities to understand capital expenditures and investments.
Review cash flow from financing to see how the company raises and repays its capital.
Analyze trends over multiple periods to get a sense of the company’s cash management efficiency.

Issues Faced:

Classification problems: There might be confusion about where to classify certain items.
Non-cash transactions: Some transactions don’t involve cash flows immediately but might do so in the future.
Subjectivity in certain items: Some items, like provisions, are based on management’s judgment and can be manipulated.
Over-reliance: Users might focus too much on cash flows and ignore other important financial statements.

Template:

Cash Flow Statement for [Year Ending XX/XX/XXXX]
OPERATING ACTIVITIES
Cash receipts from customers		$XXXXX
Cash paid to suppliers and employees		$(XXXX)
Interest paid		$(XXXX)
Taxes paid		$(XXXX)
Net cash from operating activities		$XXXXX

INVESTING ACTIVITIES
Purchase of property, plant, and equipment		$(XXXX)
Proceeds from sale of assets		$XXXXX
Investment in securities		$(XXXX)
Proceeds from sale of securities		$XXXXX
Net cash used in investing activities		$(XXXX)

FINANCING ACTIVITIES
Proceeds from issuance of stock		$XXXXX
Repayment of borrowings		$(XXXX)
Dividends paid		$(XXXX)
Net cash used in financing activities		$(XXXX)

Net increase (decrease) in cash and cash equivalents		$XXXXX
Cash and cash equivalents at beginning of period		$XXXXX
Cash and cash equivalents at end of period		$XXXXX