Cash Flow Statement

Marketing and Cash Flow

The main purpose of a Cash Flow Statement (CFS) is to help the business owner plan and control the flow of income in order to meet scheduled financial obligations. The information illustrated in the Cash Flow Statement also aids lenders and investors in determining a company's financial health.

Much like other financial statements; the Profit & Loss Statement or the Balance Sheet; the Cash Flow Statement cannot be composed without first employing a record keeping system. The more Cash Flow Figures are derived from records of actual cash sales receipts, and invoices the more accurate it will be. Keeping a record of income accounts and expense accounts will generate many of the figures for a Cash Flow Statement.

Not all Cash Flow Statement Information is "actual" information. A statement will sometimes unavoidably contain educated guesses, estimates and projections. In fact, the Cash Flow Statement is the best way to forecast working capital needs.

The Typical Structure of a Cash Flow Statement.

A Cash Flow Statement is may be thought of as a budget that continuingly evolves as time goes by. The main work of structuring a Cash Flow Statement occurs in the first column. It starts with a snapshot of your beginning cash balance. Next, it itemizes the amount of each source of income on a line of its own. The beginning cash balance plus the sum total of all income sources is totaled for your Available Cash Balance.

Next, simply make a grand total of all outgoing cash. Now, after subtracting the Total Cash Outflows from the Available Cash Balance you will arrive at the Ending Cash Balance for the first month. To see how the cash "flows", simply move the Ending Cash Balance to the top of the next months' column and enter the figure as Beginning Cash Balance. Complete these steps, entering in the appropriate dollar amounts across from each source of income and expense and you will be in a position to monitor your cash flow.

Cash Flow Statements may be depicted in several ways depending on the purpose of its use. A new start-up firm may show just six months or one year projections (showing column headings January through December) and later reduce it to a Quarterly Cash Flow Statement in year two. Lenders and investors like to see a five year Cash Flow Statement. It gives them an indication of a company's continued viability over time and its ability to pay back a loan or provide a return on investments.

The construction of a Cash Flow Statements forces a business owner to be aware of how future financial events may impact its ability to meet obligations. Below is a Cash Flow Statement showing a six month period:

Cash Flow Statement

Fishbourne Marketing Cash Flow Statement

January
February
March
April
May
June
Beginning Cash Balance

15,000

20,548

22,296

23,493

24,191

180,955
Cash inflows:
Accts. Rec. Collections
180,955
180,955
182,455
185,855
181,455
180,955
Loans on proceeds
Sales & receipts
5,000
0
3,500
0
4,500
6,000
Other:
Total Cash Inflows

185,955


180,955

185,955

185,955

185,955

186,955
Available Cash Balance
200,955
201,503
208,251
209,448

210,146
212,244
Cash Outflows (Expenses):
           
Advertising
300
300
300
400
400
400
Bank Service Charges
45
45
45
45
45
45
Credit Card Fees
35
35
35
35
35
35
Delivery
Health Insurance
478
478
478
478
478
478
Insurance
200
200
200
200
200
200
Interest
25
25
25
25
25
25
Inventory Purchases
1,000
1,000
450
750
450
1,000
Miscellaneous
300
300
300
300
300
300
Office
1,000
1,000
1,000
1,000
1,000
1,000
Payroll
83,300
83,300
83,300
83,300
83,300
83,300
Payroll Taxes
7,300
7,300
7,300
7,300
7,300
7,300
Professional Fees
250
250
250
250
250
250
Rent and Leases
1,000
1,000
1,000
1,000
1,000
1,000
Subscriptions and Dues
90
90
90
90
90
90
Supplies
200
200
100
200
100
200
Taxes and Licenses
44,629
43,429
44,629
44,629
44,629
44,829
Utilities and Telephone
130
130
130
130
130
130
Other
Subtotal

140,282

139,082

139,632

140,132


139,732

140,622
Other Cash Out Flows:
Capital Purchases
Loan Principal
125
125
125
125
125
125
Owner's Draw
40,000
40,000
45,000
45,000
45,000
40,000
Other:
Subtotal

40,125

40,125


45,125

45,125

45,125

40,125
Total Cash Outflows
180,407

179,207

184,757

185,257

184,857

189,747

Ending Cash Balance
20,548
22,296
23,493
24,191
25,289
31,497

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