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Cash flow statement

Let us start with a simple cash flow format;Cash in: Customers

New loans Share issues Disposal of assets Divestment Investment income

Cash out: SuppliersLoan repaymentsShare buybacksCapexAcquisitionInterest/tax/dividends

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Cash flow statement

Cash in XCash out ( X)Net cash flow XOpening balance XClosing balance X

The cash flow simply shows

the cash in and out , the starting

position and thus the closing

position

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Cash flow statement

Cash from operations (customers – suppliers)

Cash from financing (new shares-buybacks+new loans-repayments-interest)

Cash from investing activities (Disposal of asset+divestments-capex-acquisitions-dividends)

Tax paid

The cash flow is normally shown with similar items grouped

together

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Cash flow statement

The cash flow is popular as:-There are no funny accounting rules; did the cash come in/out or not?-Company survival is a cash matter-Growth only comes from generating cash (in order to hire more staff, buy other companies, buy/lease more buildings ...)

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Why profit cash flow

•The income statement is an activity based statement; sales go in when they are earned, costs when they are used. Neither is shown when they are collected or paid for (ie credit given or taken)•The income statement ignores certain investment activity (buying new equipment, selling a business)•The income statement ignores certain financing activity (share issues, loan repayments) •Depreciation is a cost for p&l purposes but does not represent a cash flow

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Aqhuman Financial Training

Aqhuman’s principal is Kevin Amor, FCA. Kevin qualified as a chartered accountant with PWC. He spent 12 years working in commerce at financial controller/director level. Kevin now has more than 12 years experience in financial training. He trains managers at all levels and gives 1 to 1 financial coaching to senior executives.He also teaches corporate finance andaccounting for a number of business schools’ MBA programmes.