Cash Flow Statement

Video Transcript

Welcome to the cash flow statement. By the end of this video, you'll be able to explain what is a cash flow statement, how it can help your business spend wisely, how do you create one, and what if your business falls short of cash? Let's say you own a grocery store. Every day, you receive or pay money related to your business. Some of it's cash, and some may be credit.

You might know how much you have left by the end of the day, but you might not know how much money you brought in and paid out until you create a cash flow statement. In case you're wondering what a cash flow statement is, let's take a look. Your cash flow statement tells you where you spent money and from where you received income during a given day, week, month, quarter, or year. Your cash flow statement helps you to predict whether you'll have enough cash on hand to keep your business running smoothly or whether you'll need to temporarily search for funding from other sources, such as loans or delays of payment. So how do you create a cash flow statement?

The formula for calculating your cash flow is quite simple. Start with the money you had at the beginning of a period, then add positive cash flow, like money you gained from sales or loans received during that time, and subtract negative cash flow, such as money you paid for workers or supplies, equals your ending cash balance or the cash you have left. Now let's break each concept down to its core. Your beginning cash balance is the amount of money you have at the start of a period of time, for example, on the first day of a new month. You may have 500 units at the June.

This is your beginning cash balance.