Unit 10: Statement of Cash Flows
Now, let's explore how companies manage cash flow. Most companies use the revenues they generated yesterday to pay today's and tomorrow's expenses. For example, some companies manage their cash and maintain enough reserves to pay their expenses when they are due. Others must obtain capital loans to pay their bills, because they have highly seasonal sales or experience rapid growth and do not have enough savings to pay for the upfront costs to fund their expansion. While the company's income statement and balance sheet help monitor performance and their current financial condition, neither statement provides information about cash activity during a given time period.
Companies must manage their cash wisely to accommodate the lag time between revenues and expenses so they can pay their bills in a timely manner. In this unit, we focus on how to prepare a statement of cash flows, which will provide important information
about performance measures, cash-on-hand, and cash needed.
Completing this unit should take you approximately 5 hours.
10.1: Purpose of the Statement of Cash Flows
10.2: The Types of Cash Flows
10.3: Preparation of Cash Flow Statements
10.4: Cash Flow Analysis