Cash flow statement

Unlike other items, it is not possible to project cash. The cash balance is a fallout from all transactions carried out during the period under review.

This fact is captured in the cash flow statement, which considers the inflows and outflows of cash. The net result is then applied to the opening cash balance to arrive at the closing cash balance at the period end. The following screenshot shows a completed cash flow statement, which ends with a closing balance for cash that is taken to the balance sheet:

Figure 2.10 – Cash flow statement

When the closing cash balance is taken to the balance sheet, the balance check for the projected years should now show TRUE on a green background, giving some assurance that calculations up till that point are correct.

The cash flow statement is one of the most important statements for a company. To most investment analysts, cash is king.

You may wonder why you need another statement that...