Cash flow statement with excel

The Cash Flow Statement, or Statement of Cash Flows, summarizes a company’s inflow and outflow of cash, meaning where a business’s money came from (cash receipts) and where it went (cash paid). By «cash» we mean both physical currency and money in a checking account. The cash flow statement is a standard financial statement used along with the balance sheet and income statement. The statement usually breaks down the cash flow into three categories including Operating, Investing and Financing activities. A simplified and less formal statement might only show cash in and cash out along with the beginning and ending cash for each period.

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To perform a cash flow analysis, you can compare the cash flow statement over multiple months or years. You can also use the cash flow analysis to prepare an estimate or plan for future cash flows (i.e. a cash flow budget). This is important because cash flow is about timing — making sure you have money on hand when you need it to pay expenses, buy inventory and other assets, and pay your employees.

A cash flow analysis is not the same as the business budget or profit and loss projection which are based on the Income Statement. However, for a small uncomplicated business operating mainly with cash instead of credit accounts, there may seem to be little difference.

Description

This cash flow statement was designed for the small-business owner looking for an example of how to format a statement of cash flows. The categories can be customized to suit your company’s needs. If you don’t want to separate the «cash receipts from» and the «cash paid for» then you can just delete the rows containing those labels and reorder the cash flow item descriptions as needed.

The spreadsheet contains two worksheets for year-to-year and month-to-month cash flow analysis or cash flow projections.

Update 9/30/2021: You can now try the cash flow template in Spreadsheet.com which uses a set of categories based on common public stock financial statements.

Cash Flow Statement Essentials

Operating Activities

Operating activities make up the day-to-day business, like selling products, purchasing inventory, paying wages, and paying operating expenses. Perhaps the most important line of the cash flow statement is the Net Cash Flow from Operations. This section of the statement is associated with the Current Assets and Current Liabilities sections of the Balance Sheet, as well as the Revenue and Expenses section of the Income Statement.

Investing Activities

Investing activities include buying and selling assets like property and equipment, lending money to others and collecting the principal, and buying/selling investment securities. This section of the statement is associated with the Long-Term Assets section of the balance sheet.

Financing Activities

Financing activities include borrowing from creditors and repaying loans, issuing and repurchasing stock, and collecting money from owners/investors, and payment of cash dividends. This section of the statement is associated with the Long-Term Liabilities and Owners’/Stockholders’ Equity from the Balance Sheet.

I’m not going to try to explain how to prepare or analyze the cash flow statement other than to say that if you have the records of all the cash transactions, then the preparation can be done using the simple method of categorizing the receipts and payments into the three categories listed above. The indirect method can be used to create the statement of cash flows from the information in the balance sheet and income statement, but I’ll leave that explanation for the textbooks. For more information, see the references below.

References:

• Financial Accounting: Reporting and Analysis by M.A. Diamond, E. K. Slice, and J.D. Slice., 2000.
• Cash Flow Statement at wikipedia.org

Disclaimer: The information on this page is for illustrative and educational purposes only. The spreadsheet is provided as-is. We do not guarantee the results or the applicability to your financial situation. You should seek the advice of qualified professionals regarding financial decisions.

Cash Flow Statement is a ready-to-use template in Excel, Google Sheet, and OpenOffice to prepare a detailed cash flow of the company for a specific period.

Moreover, this template provides the cash flow from operating, investing, and financing activities.

What Is A Cash Flow Statement?

Cash Flow Statement is a financial statement that reports the cash generated and spent during a period. It is one of the main financial statements.

In other words, this statement allows you to understand how your company operations run. It gives you an overview of where the money is coming from, and how it is spent.

You can decide the period for this statement. It can be either monthly, quarterly, half-yearly, or yearly. It can be more in some cases as per the requirement.

Reviewing this helps companies in taking crucial and big economic decisions.

Components Of A Cash Flow Statement

A Cash flow statement consists of the company’s inflow and outflow of cash. It covers 3 categories of activities: Operations, Investing, and Financial.

Operating Activities

Operating activities are the main sources of cash inflow and outflow. It depicts the cash earned and spent on regular business activities. It includes activities such as sales receipts, merchandise purchases, salaries, and other operating expenses.

Investing Activities

Cash flow from investing activities includes inflow and outflow of cash in investing activities. It can include assets, equipment, acquisitions, and equity. Usually, they are the long-term assets of the company’s balance sheet.

Financial Activities

The Financial activities of the cash flow statement display the inflow and outflow of cash from financing activities. These involve repayment of loans, stock issuance and dividends, equity buy-back programs. Usually, these items are the long term liabilities on a company’s Balance Sheet.

Methods Of Cash Flows

There are two types of cash flows: Direct and Indirect.

Direct Cash Flow Method

The direct cash flow method involves adding up all the cash receipts and payments of a business. These include payments to suppliers, receipts from customers, and salaries paid to employees. In this method, the opening and closing balance of various accounting heads.

Indirect Cash Flow Method

In the Indirect cash flow method, cash flow from operating activities is derived. You can find this as Net income on your income statement.

Usually, the net income on the income statement is prepared on an accrual basis. Hence, one needs to make adjustments to find the EBIT (earnings before interest and taxes).

Moreover, you need to make adjustments entries. This involves adding back the non-operating expenses that do not affect the cash flow.

We have created a simple and easy to use Cash Flow Statement with predefined formulas. Just enter the required data and get an overview of your company’s cash flows.

Excel Google Sheets Open Office Calc

Click here to Download All Financial Statement Excel Templates for ₹299.

Note: To edit and customize the Google Sheet, save the file on your Google Drive by using the “Make a Copy” option from the File menu.

Additionally, you can also download other Financial templates from our websites like Bank Reconciliation Statement and Trial Balance, Balance Sheet, etc.

Let’s discuss the Cash Flow Statement in detail.

Contents of Cash Flow Statement

This statement consists of two sections: Heading Section and Data Input Section.

Header Section

The header section contains the details like Name of the Company, Heading “Cash Flow Statement”.

The second row contains the preparation date along with the Opening Balance of cash.

Data Input Section

This section includes cash flow from mainly 3 type activities which are as follows: Operating activities, investing activities, and financial activities.

Operating activities are the principal revenue-producing activities of our company.

You can calculate Net Cash Flow from Operating deducting Operating expenses from operating incomes.

Operating expenses are salaries, income tax, etc. Incomes include cash received from customers and other sources.

Investing activities are the acquisition and disposal of long-term assets. It also includes other investments that are not cash equivalents.

Similar to Operating activities, you can calculate Net Cash Flow from Investment by deducting Investment expenses from incomes.

Investment expenses like the purchase of property, Loans, etc. Incomes like cash received from property sold, principal amounts of loan, etc are considered.

Financing activities are activities that result in changes in the size and composition of the owner’s capital. The owner’s capital includes preference share capital and borrowings.

Net Cash Flow from Financial is calculated by deducting financial expenses from financial Income.

These expenses include the repurchase of treasury stock, repayments, etc. Incomes include cash received against share issuance and borrowings done by the company.

In the end, the Closing Balance of Cash is given.

Benefits of Cash Flow Forecasts

• Cash Flow Statements can bee used to predict the future cash flow of companies.  This statement reflects the financial health of a company.
• A cash flow statement tells you if you’re running out of money even when you’re profitable. You can also see how your bank loan payments are affecting your cash. Thus, it very important for a company to prepare and review Cash Flow Statements.
• Cash Flow Statements help to the actual cash position which cannot be derived from the P&L statement. Thus, being aware of the cash liquidity, you can arrange for any cash shortfalls. Or you can use the excess cash for growth purposes.
• Furthermore, it enables the management to plan and control the financial operations properly. You can measure the profitability and financial position by doing cash flow analysis along with ratio analysis. Moreover, it is a great tool for internal financial management.

Limitations of Cash Flow Forecasts

• The cash flow cannot project the profits as it shows only the cash position of a company.
• Moreover, for any cash flow projections, we need to use the Balance Sheet as well as the P&L statement.
• The cash flow statement displays actual cash activities. Hence, it cannot be used as a substitute for the P&L account.
• By making some adjustments in purchases and other payments, the cash position can be manipulated. Thus, sometimes the cash flow statement doesn’t display the real liquidity position.

How To Analyze A Cash Flow Statement?

Operating cash flows are the heart of the cash flow statement. Thus, companies having high Operating cash flows consistently are healthy and self-sustaining.

Usually, negative investing cash flows indicate the expansion of business or replacement of old assets. Thus, it is necessary to find out whether investments can generate revenue growth in the future or not.

Often, companies having negative cash from Investing activities will have positive Financing cash flows.
Generally, it is because companies raise additional debt or equity capital to support their investments.

However, a company’s cash inflows from core operations must be enough to fund its investments. It should also cover lenders and shareholder’s obligations. Therefore, in the long run, investing and financing outflows must be almost equal to Operating cash flows.

Often we can see that some companies having low or negative cash flows from operating and a positive from Investing. In such a scenario, it means that a company funds its operations by liquidating its assets.

Such cash flows can be a wake-up call for a company. From an investor’s point of view, such a company can even be on the verge of bankruptcy.

There can be scenarios where companies need to sell their assets to maintain dividend levels. It is done to handle its investor. Because dividend cuts are a sign of poor financial health.

Thus, while selling the assets, it should be kept in mind that they aren’t core business. Moreover, they must also not be an unnecessary financial burden to the company. As an investor, you must look deep into the company if they are selling key assets.

Positive cash flows from Financing activities and a low or negative cash flows from operating activities indicates improper usage of its capital. Hence, it shows operational inefficiency and improper management of a company.

Tips To Improve Cash Flow

• To improve your cash flows, you can make adjustments to your staffing to decrease payroll expenses.
• In addition to the above, avoid unnecessary purchase of inventory.
• Furthermore, manage Accounts Payable efficiently. Make payments neither too early nor not too late.
• Create some offers to acquire more new customers and to increase sales fro the existing customers.
• Additionally, keep your accounts receivable stringent. Reach out to late-payers for speedy payments.
• Moreover, depending on market demand decreasing or increases prices can help you increase cash flows.
• Finally, if business operations suffice for managing proper cash flow, find a source of short-term working capital.

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Frequently Asked Questions

A cash flow statement, also referred to as a statement of cash flows, shows the flow of funds to and from a business, organization, or individual. It is often prepared using the indirect method of accounting to calculate net cash flows. The statement is useful for analyzing business performance, making projections about future cash flows, influencing business planning, and informing important decisions. The term “cash” refers to both income and expenditures and may include investments and assets that you can easily convert to cash. By conducting a cash flow analysis, a business can evaluate its liquidity and solvency, compare performance among accounting periods, identify cash flow drivers to support growth, and plan ahead to maintain a positive cash position.

Below you’ll find a collection of easy-to-use Excel templates for accounting and cash flow management, all of which are fully customizable and can be downloaded for free. 

You don’t need to use a particular app or even hire a bookkeeper to create financial documents. All you need is Microsoft Excel and a little know-how.

Most financial statements are composed of the cash flow statement, the income statement, and a balance sheet. But for now, let’s focus on the first document.

So, here’s a guide on how to make your cash flow statement in Excel.

What Is a Cash Flow Statement?

A cash flow statement is a financial document that shows the movement of cash and cash equivalents in your business. You could see where all the money in your business came from and where you spend it.

This document can tell you how you’re managing your operations. Do you have enough cash to operate your business? Can you pay off your coming obligations?

You can accurately tell the cash you have available for any given period with this.

1. Choose a Period to Cover

Cash flow statements are usually broken down into monthly periods. That way, you can see how much you gained and spent.

Most businesses start their fiscal year at their founding date. But, you can choose to begin in other months (like January) if it’s more convenient for you.

2. Prepare Your Data

Before creating your cash flow statement, you should have your data on hand. This allows you to get accurate results. So, if you have a journal, keep it within your reach.

If you don’t have a journal, a list of all your expenses and revenue is a good starting point. As long as you write down the date, payee, payor, details, and amount of every cash movement, you can make a cash flow statement.

3. Sort Your Data

When you have all your transactions, it’s time to break them down into three categories: Operations, Investments, and Financing.

Operations relate to cash made and spent for day-to-day activities. These include money made from selling products and services. Cash paid on overhead expenses, salaries, and inventory also fall under this category.

Investing covers expenses on long-term assets like property and equipment. Any cash made from the sale of these assets is also considered here.

The financing comes from investors (including the owners) and from loans. In this section, we also discuss dividends and loan repayments.

4. Create Your Excel File

To start making your Cash Flow Statement, open up Excel and create a new file.

At the top row, write down your [Company Name] Cash Flow Statement. This lets you easily identify the file upon opening.

Leave one row empty for formatting, then write Period Beginning and Period Ending in the next two rows. Do this to know what period you’re exactly covering.

Again, leave one row empty, then write Cash Beginning and Cash Ending. These rows will show reflect what you have at the start and the end of the period.

5. Determine Your Subcategories

The three main categories generally remain the same across companies. However, the subcategories vary wildly. They would depend on your type of business and operations.

To help get you started, here are some excellent examples per category.

1. Operations

• Under Cash Inflow
  • Sales
• Under Cash Outflow
  • Inventory
  • Salaries
  • Operating expenses: these include overhead costs like rental, telecoms, electricity.
  • Interest: this is the interest amount you pay on loans you’ve made.
  • Taxes

2. Investments

• Under Cash Inflow
  • Assets Sold
  • Loans Paid Back: these are payments to loans you’ve given to persons or institutions.
• Under Cash Outflow
  • Assets Bought
  • Loans Issued: these are the amount you’ve lent to persons or institutions.

3. Financing

• Under Cash Inflow
  • Borrowing: these are money you receive from lending institutions.
  • Stock issuance: these are investments made by the owners and other third parties.
• Under Cash Outflow
  • Loan Repayment: this is the amount you spend paying back the principal on your loans.
  • Dividends: this the cash spent when sharing profits with investors and owners (including yourself).

These are the commonly used subcategories, but feel free to add more as you see fit. Just a reminder: each category must relate to actual cash spent and received.

Add an empty row at the end of each category list, then write Net Cash Flow — [Category]. This is the subtotal that shows how much money you’ve made (or spent) for each section.

Finally, after listing all categories, subcategories, and subtotals, at the bottom, write Net Cash Flow. This shows the total inflow (or outflow) of money you had for the period.

Don’t forget to add an empty row between categories (after the subtotal) and an indent for each subcategory. You can find the Indent button under the Alignment section of the Home ribbon. This allows for cleaner formatting and makes it easier to see and analyze.

Also, resize the first column to avoid its contents from spilling over to the next columns. Double-click on the line between columns A and B to do this automatically.

6. Prepare Your Formulas

Cash Flow Statement formulas are pretty simple. All you need is to use the sum command to subtotal each category.

1. First, select the Net Cash Flow — [Category] cell under the corresponding period and category subtotal.
2. Then, type =sum( and choose all the cells for each section. Don’t forget to hold the shift key so that you can select multiple cells.
3. Once done, press the Enter key, and you should see the subtotal for that category.

4. To get the net cash flow, repeat the procedure above.

5. Type =sum(, then choose each corresponding subtotal.

6. This time, hold the ctrl key to select multiple cells that aren’t beside each other.

7. Once done, press the Enter key again, and you have your total cash flow for the chose period.

To get your cash ending:

1. Go to the corresponding cell and type =sum(
2. While holding down the ctrl key, click on the cells with the net cash flow and cash beginning values for the corresponding period.
3. Press the Enter key, and you’ll get the amount you should have at the end of your chosen period.

7. Setting Multiple Months

If you want to compare your cash flow over multiple months, you need to set this formula first. Under Beginning Cash for the next month, write «=» then click on the corresponding cell for Ending Cash of the last month. This automatically copies the Ending Cash for the previous month to the Beginning Cash of the following month.

As for the rest of the formulas, all you need is to copy them across the rest of the months you want to cover.

1. Hold the shift key to select all the cells from Cash Ending all the way to Net Cash Flow.
2. Once done, type ctrl + c to copy them.
3. Then, click on the corresponding cell for Cash Ending for the following month and type ctrl + v.
4. Excel will automatically adjust these formulas to reflect the correct corresponding column.

Note: make sure there are no other values in the cells you selected except the formulas.

8. Formatting Your Rows and Numbers

Format your entries, so negative numbers appear red. This lets you analyze your statement much easier.

1. To do that, select all numerical entries, then click on the dropdown menu in the Number section.
2. You can find them at the Home ribbon.

3. Click More number formats… A new window called Format Cells will open.

4. Under the Number tab, go to the Category menu, then choose Currency.

5. Choose the correct Symbol in the dropdown menu.

6. Then, under the Negative numbers: subwindow, select the -$1234.10 with a red font color option.

This should let you see your expenses in red, making it easier to differentiate inflow from the outflow.

You can also select each category and subtotal row and fill them with different colors. This will make it easier to differentiate between sections at a glance.

9. Input Your Values

After you’ve prepared everything, all that’s left is to input the actual values. Don’t forget to add a negative sign on expenses! Once done, you now have a completed cash flow statement.

You can access and save a copy of this cash flow statement here.

Plan Your Next Move

Now that you’ve completed your cash flow statement, you have a better view of your business’s liquidity. It can help you plan your next moves, allowing you to make wise decisions.

With a cash flow statement, you have the first document you need to see your overall business performance. Pair that with an income statement and a balance sheet, then you’ll know exactly where you stand.