As a business owner, it is essential to regularly run the following two types of cash flow reports

As a business owner, it is essential to regularly run the following two types of cash flow reports

By: M. Gonzalez – M&A SDC
1. **Statement of Cash Flows**:

– **Purpose**: Provides a detailed overview of how cash is generated and used by the business over a specific period.
– **Importance**:
– Helps in assessing the liquidity and solvency of the business.
– Identifies cash sources and uses, aiding in effective financial planning.
– Pinpoints potential cash flow issues and areas requiring attention.
– **Sections**:
– Operating Activities
– Investing Activities
– Financing Activities

Pie Chart
1. **Statement of Cash Flows**:

2. **Cash Flow Forecast**:
– **Purpose**: Estimates the future cash inflows and outflows, enabling proactive decision- making.
 – **Importance**:
– Assists in predicting cash shortages or surpluses, facilitating better financial management.
– Guides investment decisions and planning for capital expenditures.
– Essential for setting realistic financial goals and monitoring progress.
– **Components**:
– Projected Sales Revenue
– Expected Expenses
– Cash Reserves Evaluation