One of the most important ways to measure a business's health is through a cash flow statement — here’s why.
What is the Purpose of a Cash Flow Statement?
What is the Purpose of a Cash Flow Statement — FAQs
Why is cash flow so crucial for companies?
When a business has positive cash flow, it means that its liquid assets are growing. This gives it breathing room in the event of unexpected financial difficulties and allows it to pay off debts, reinvest in the company, reward shareholders, cover operating costs, and more.
Where does the cash flow statement fall short?
It does not reveal all aspects of the company’s financial health. Furthermore, a cash flow statement is an after-the-fact study. This strategy does not include any kind of cash flow forecasting.
Cash flows: What's the formula?
Cash flow = cash generated from operating activities minus cash invested in financing activities plus cash on hand at the outset.
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