- Cash is king
- Profit is vanity and cash-flow is sanity
Cashflow is a management tool to help avoid liquidity problems. It tracks inflows of money and the inevitable outflows.
Cash-flow statements differ – each one suited to a particular business needs
- Simple cash-flow statement (or cash budget): arranges items into two categories – inflows & outflows
- Operating cash-flow statement: Limits the analysis to Operational items and excludes financing
- Financing cash-flows: Includes cash raised by new debt or equity capital, as well as expenses incurred for repaying debt or paying dividends on stock
- Statement of cash-flow: An external statement that depicts the period to period changes in balance sheet items.