In the business world, it is of the utmost importance to take into account cash, since it allows constant operations to be carried out, and they can also invest immediately for the development of the company. Most of the time, groups of entrepreneurs manage and analyze monthly the financial statements that are created due to the accounting information, the general state and the balance of accounting results.
It must be remembered that what is really important in this area is not how money moves, that is how assets do not work, what really matters is that cash works and continues to function correctly .
Cash flow is the way in which money is generated and invested to advance the company . The cash flow statement is the financial statements that notifies about the cash movements, it is in charge of reviewing and showing how the cash moves, and how it is used either for investment, operation and / or financing activities of the company. This is also responsible for showing the level of liquidity , in order to cover and carry out operations that may be found.
The objective of the operating cash flow statement is to present important information for a company’s decision-making, to provide information on activities and investments, to resolve the ability of a company to control its obligations, and to clearly and accurately present the management of money. It is almost impossible that accounting problems are generated in a company with these flows.
What are the types of operating cash flow statements?
The types of operating cash flow statements vary according to your general point of view in the company, and these are the following existing types:
Operating cash flow statement:
- It is generated by the collections and payments that must be made. It is also used when there is interest on the rate of a payment.
- It is generated by taxes on the profits of a company.
- It is generated by the dividends on a purchase.
- The purchase costs of this type are much more extensive .
Statement of cash flow in foreign currency:
- It is handled in any company, but previously it must be taken into account that it must be changed to the currency that the company handles.
- An exchange rate must be carried out that is safe and that is not devalued.
- If one of these operations goes wrong, it will be presented through an investment flow.
- It has fairly secure sources of financing .
Statement of cash flow according to your method:
- Direct method: It is generated by ordering the income and expenses that have been made throughout the company, with this method the magnitudes are formed raw.
- Indirect method: It is generated by ordering the utility of the results, to reach the point of having everything in books. This method is much more complex so it is less used . Because they do not present cash movements, but it affects the company to generate payments.
What is the structure of the operating cash flow statement?
It is structured in three basic sections for good cash flow management, those three sections are the following:
Operation activities
They refer to all activities that have to do with the development of a company , as well as the production of all its goods and resources. Here we find the payroll of tax-related liabilities, we find the inventory account.
Investment activities
They refer to all investments that have to do with the company . Here, expenses, costs, investments, transactions, etc. have to be included. All purchases, maintenance and productive profits of the company are carried out by investment activities. Account management is the responsibility of this part of a business.
Financing activities
They refer to all obtaining resources in the company . It is the opposite of operating activities, since in operating activities the liabilities of a company must be excluded, since this is the work of financing activities.
