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Contents
Preface .................................................................................................................................................... 3
What Is Cash Flow Analysis? .................................................................................................................. 4
Cash Flow Analysis Explained ................................................................................................................ 5
Why Is Cash Flow Analysis Important? .................................................................................................. 7
Cash Flow Analysis Basics ...................................................................................................................... 9
How Do You Perform Cash Flow Analysis? .......................................................................................... 10
Preparing a Cash Flow Statement ........................................................................................................ 10
Cash Flow Analysis Example ................................................................................................................ 12
Five Steps to Cash Flow Analysis.......................................................................................................... 13
Cash Flow Analysis Is Critical for Every Business ................................................................................. 16
Cash Flow Statement ............................................................................................................................ 17
Cash Flow From Operations ............................................................................................................. 17
Cash Flow From Investing................................................................................................................. 17
Cash Flow From Financing ................................................................................................................ 18
Mohamed Samir Rashed CMA , IFRS
Preface
Cash flow differs from profit. Cash flow refers to the money that
flows in and out of your business. Profit, however, is the money you
have after deducting your business expenses from overall revenue.
Mohamed Samir Rashed CMA , IFRS
operating cash flow. But you don’t know either way until you review
your cash flow statements or perform a cash flow analysis.
There are two forms of accounting that determine how cash moves
within a company's financial statements. They are accrual accounting
and cash accounting.
Mohamed Samir Rashed CMA , IFRS
There are two common methods used to calculate and prepare the
operating activities section of cash flow statements.
The Cash Flow Statement Direct Method takes all cash collections
from operating activities and subtracts all of the cash disbursements
from the operating activities to get the net income.
The Cash Flow Statement Indirect Method starts with net income and
adds or deducts from that amount for non-cash revenue and expense
items.
Cash flow analysis helps your finance team better manage cash
inflow and cash outflow, ensuring that there will be enough money to
run—and grow—the business.
cash flow, and other numbers, and the underlying details, are just a
few clicks away.
Cash flow and cash flow analysis are important for virtually every
business. Working without cash flow knowledge is like a pilot flying
blind. Never run your business without updated, accurate cash flow
data.
Mohamed Samir Rashed CMA , IFRS
Cash inflows come from the sale of assets, businesses, and securities.
Investors typically monitor capital expenditures used for the
maintenance of, and additions to, a company's physical assets to
support the company's operation and competitiveness. In short,
investors can see how a company is investing in itself.