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Hello Community! Today we will be talking about cash flows. According to this article in the QuickBooks Blog, having a positive cash flow is important for the success of your business. It helps make sure you can pay bills, buy equipment and inventory, Invest in new growth opportunities, & repay debt. In a cash flow statement, you will notice that there’s 3 different key types or sections. Let’s take a look at what these are:
- Operating: An operating cash flow includes cash from core business activities that involve the sale or production of your goods or services. For example a customer payment, an inventory purchase, or payroll.
- Investing: Investing cash flow is money you spend on fixed assets such as equipment. It can also be cash you bring in from selling equipment.
- Financing: This is the money you pay or receive from lenders, investors, or other creditors.
It’s important to remember that cash flow statements provide valuable insights into your company’s finances. But business owners aren’t always sure how the different types connect. For more resources and in-depth information on how accounting statements can help you understand your company’s performance, make sure to check out the full article here. Until next time!
