In the world of companies, it is of the utmost importance to take into account cash, since it allows operations to be carried out on a constant basis, and they can also invest immediately for the development of the company. Most of the time, the groups of entrepreneurs manage and analyze monthly the financial statements that are created due to the accounting information, the general statement and the balance of accounting results.
We must remember that what is really important in this area is not how money moves, assets do not work like that, what really matters is that cash works and continues to work correctly.
Cash flow is the way money is generated and invested to move the business forward. The cash flow statement is one of the financial statements that notifies about cash movements, it is responsible for reviewing and showing how cash moves, and how it is used either for investment, operation and / or financing activities of the company. business. This is also in charge of showing the level of liquidity, in order to cover and carry out operations that may be found.
The purpose of the operating cash flow statement is to present important information for a company’s decision-making, to provide information on activities and investments, to resolve the company’s ability to control its obligations and to clearly and accurately present the management of money. It is almost impossible for accounting problems to arise in a company with these flows.
What are the types of statement of operating cash flow?
The types of operating cash flow statement vary according to your general point of view in the company, and these are the following existing types:
Operating Cash Flow Statement:
- It is generated by the collections and payments that must be made. It is also used when there is interest on the rate of a payment.
- It is generated by taxes on a company’s profits.
- It is generated by the dividends on a purchase.
- The purchase costs of this type are much more extensive.
Statement of cash flows in foreign currency:
- It is handled in any company, but previously it must be taken into account that it must be changed to the currency that the company handles.
- An exchange rate must be made that is safe and that is not devalued.
- If one of these operations goes wrong, it will be presented through an investment flow.
- It has fairly secure sources of financing.
Statement of cash flow according to its method:
- Direct method: It is generated by ordering the income and expenses that have been made throughout the company, with this method the magnitudes are formed raw.
- Indirect method: It is generated by ordering the usefulness of the results, to get to the point of having everything in books. This method is much more complex, so it is less used. Because they do not present face-to-face cash movements, but it affects the company to generate payments.
What is the structure of the statement of operating cash flow?
It is structured in three basic sections for good cash flow management, these three sections are as follows:
operating activities
They refer to all the activities that have to do with the development of a company, likewise, to the production of all its goods and resources. Here we find the payroll tax-related liabilities, we find the inventory account.
Investment activities
They refer to all investments that have to do with the company. Here they have to include the expenses, costs, investments, transactions, etc. All the purchases, maintenance and productive gains of the company are carried out by the investment activities. Account management corresponds to this part of a company.
Financing activities
They refer to all obtaining resources in the company. It is the opposite of operating activities, since in operating activities the liabilities of a company must be excluded, since this is the work of financing activities.
