The Importance of Preparing The Cash Flow Statement

1. Cash flow statement is a table showing cash and cash outflow estimates for a period of less than one year. For example, three months, four months or six months.

2. The Statement of Cash Flow Statement is as follows:
(a) provide information on cash receipts, cash payments and the balance for a specified period.

(b) shows the business’s ability to pay for business management expenses and settle its debts or not.

(c) helping businesses plan their income and expenses.

(d) help businesses control the use of money and spend money on priority and safer.

(e) allows businesses to compare between actual income and money expenses with estimates made in the Cash Flow Statement.

(f) be a guide to the bank to approve a loan.