Cash flow statements, Financial Management

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Cash flow statement:

The cash flow statement summarises the flow of cash into and out of the business over a certain period of time.

The cash flow statement measures the liquidity of the business (its ability to meet its debts in a timely manner).

The cash flow statement is one of the key financial statements for management accounting and is the primary statement managers would utilise in for the day to day running of the business.

A typical basic cash flow statement could look like the following:

Item Description

Jul

Aug

Sep

Oct

Nov

Dec

Receipts

 

 

 

 

 

 

Prof Fees / Commissions

32,000

36,000

38,000

30,000

40,000

38,000

Owner's Funds

 

20,000

 

 

 

 

Bank Loans

 

 

 

30,000

 

 

Total Receipts

32,000

56,000

38,000

60,000

40,000

38,000

 

 

 

 

 

 

 

Payments

 

 

 

 

 

 

Advertising

8,000

6,000

8,000

9,000

5,000

4,200

Wages

20,000

21,000

22,000

24,000

21,000

23,000

Telephone

3,000

 

 

4,000

 

 

Taxes

 

 

 

 

28,000

 

Other

10,000

11,000

12,000

15,000

10,000

13,000

Total payments

41,000

38,000

42,000

52,000

64,000

40,200

Net monthly movement

(9,000)

18,000

(4,000)

8,000

(24,000)

(2,000)

Opening Cash Balance

(4,000)

(13,000)

5,000

1,000

9,000

(15,000)

Closing Cash Balance

(13,000)

5,000

1,000

9,000

(15,000)

(17,000)


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