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.

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

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: