Cash Flow Report for Business

Incremental Cash Flow statement is a component of financial statements that presents information about cash receipts and disbursements that occur in a certain period.  The cash flow report is one of the mandatory reports that must be made by an entrepreneur, entity, organization or company. To make a cash flow report, you need two important data, namely cash receipt records and cash expenditure records.  This cash receipt record is like cash income, investments made in cash.  While notes on cash expenditures include expenditures for paid expenses, expenses for investment with the aim of business expansion are also included in this activity.

Cash from Investor

Aside from being a liability, a cash flow statement is also made because it has many benefits that you will get.  One of them is to look at the financial position quickly and easily.  If the net cash flow shows a positive number, it means that the company gets a profit or profit and vice versa if it shows a negative number, it means the company has a deficit.  In addition, for those of you who want to get additional capital from investors or creditors, cash flow reports can also be important information that can be a supporting document to assess a company.  Below are some of the benefits of a cash flow report for those of you who want to apply for a capital loan or get a business investment.

Company Ability to Produce Cash in the Future

One of the objectives of financial statements is to provide information that can be used to predict the future.  In cash flow reports, investors or creditors can see the relationship between activities in the company.  For example, looking at the relationship of income generated in the current period with net cash flows from operational activities.  In addition, investors and creditors can also see cash flows from operating activities with a decrease or increase in cash.  That way, they can more easily assess the company’s ability to generate cash in the future.  On the other hand, they can also forecast the amount of cash flow that can be generated for the next period.

The difference in Net Income and Cash Resulting from Operating Activities

In addition to the cash flow statement, there is also an income statement that must be made.  In the income statement, investors or creditors can find out the profits or profits obtained by the company.  From these benefits, they can assess the success of a company.  However, there are opinions that do not agree to this.  The objection is caused by the basis used in profit or loss is accrual so that to make predictions in the future is not right.  In contrast to this, net cash generated from operating activities is considered more reliable.  So, by comparing the two differences between net income and net cash flow, creditors or investors can find out the cause.  That way, they can make decisions easily and not only come from one type of information. In the other hand, cash flow must be running always to keep the business on.