COMPONENTS OF A CASH FLOW STATEMENT

• 3 main sections
  • Cash from operating activities
    • From customers
    • Less suppliers, employees and government
    • Positive figures indicate more cash
    • Negative figures indicate less cash
  • Cash from investing activities
    • Long-term capital assets
    • Negative figure indicates purchases
    • Positive figures indicates sales of old assets
  • Cash from financing activities
    • Repayment of debt and loans
    • Capital contributions and withdrawals
    • Negative figure means the business used cash to pay back loans/owner withdrawals
    • Positive figure means cash came in from outside to finance activities
  • It’s a good sign if cash from operating activities is enough to cover financing and investing activities
  • Cash at the end of the year is the cash in your bank account or petty cash