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Useful of Cash Flow

Bhavesh (Accounts) (152 Points)

21 August 2021

what is a cash flow?. what is useful for and how to prepare the same.

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3 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14167 Points)
Replied 21 August 2021

Cash flow statement is prepared to understand , cash flow between two point of time .
one is Source of Cash and second Application of Cash . statement is prepared on the basis of following activities perform during the year .
1) Operating activities
2) Financial activities
3) Investment activities .
will get all information about cash inflow and outflow during the year . Cash flow statement is applicable to almost all companies .

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 21 August 2021

Cash flows is nothing but keeping track of cash inflows/outflows in a statement like the above answer says. It is also used for analysis to find out how much cash is there after all activities after paying back back debt and equity holders.

Nidhi (Chief Accountant) (3150 Points)
Replied 21 August 2021

Cash flow represents the cash receipts and cash disbursements as a result of business activity. The statement of cash flows enables users of the financial statements to determine how well a company's income generates cash and to predict the potential of a company to generate cash in the future.
Having a positive cash flow means that more money is coming into the business than going out. It's just as important as profit when it comes to determining your business' performance. ... Fast growing businesses tend to require more cash to buy stock, hire employees, etc. so it's vital to keep an eye on cash and cash flow.