7.1 The Cash Flow Statement
The Cash Flow Statement (or Statement of Cash Flows if you prefer) is a requirement for reporting entities in many countries. It is a technical statement disclosing net cash flows in three areas:
Similar to the way the income statement is a subset of the balance sheet, so is the Cash Flow Statement. Below is an example using Global Retail.
- Operational changes (flows)
- Investment changes (flows)
- Financing changes (flows)
Similar to the way the income statement is a subset of the balance sheet, so is the Cash Flow Statement. Below is an example using Global Retail.
If you are preparing a manual Cash Flow Statement, you start with the trial balance of the last two reporting periods (three if you don't have last year's Cash Flow Statement). The changes are calculated, adjusted to eliminate non-cash impacts and then placed into the three types of cash flows to be reported: operational, investment and financing.