Cash Flow Statement
The Cash Flows consist on all the movements that refer to money which moves/”flows” from the inside of the organization into the outside and vice versa regarding a previous period according to a current situation. Basically, this statements aims to create a list where all the cash movements of a period/year/semester will be documented for further analysis.
In order to create this Statement you should follow the next steps:
1. Target the specific period/year/semester/time that you want to analyze;
2. Identify the Starting Cash value of the respective period;
3. Collect all the Receipts regarding that period;
4. Collect all the Disbursements regarding the respective period;
5. Calculate the difference between the Total Receipts and the Total Disbursements in order to obtain the Net Cash increase or decrease value;
6. Calculate the difference between the Starting Cash and the Net Increase (Decrease) thus obtaining the Ending Cash.
We truly believe that these concepts might seem a little bit confusing on the first impact. However you will start finding them easy and quite intuitive over time and some practice, so do not worry.
To conclude this article, we will leave you with an example of a Cash Flow Statement for you to easily understand how to properly organize all the steps suggested above and conclude your own Cash Flow Statement.