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Sample Cash Flow Statement for a Small Business in the US

Running a small business involves keeping track of various financial metrics. This ensures that the business remains healthy and sustainable. One important financial document is the Cash Flow Statement. This document helps business owners understand the inflow and outflow over a specific period. To give you an idea, here’s a sample cash flow statement:

Sample Cash Flow Statement

ABC Small Business Inc.
Cash Flow Statement
For the Year Ended December 31, 2023

Description Amount ($)
Cash Flows from Operating Activities
Cash received from customers 150,000
Cash paid to suppliers and employees (90,000)
Cash generated from operations 60,000
Interest paid (2,000)
Income taxes paid (5,000)
Net Cash Provided by Operating Activities 53,000
Cash Flows from Investing Activities
Purchase of equipment (10,000)
Sale of investments 5,000
Net Cash Used in Investing Activities (5,000)
Cash Flows from Financing Activities
Proceeds from bank loan 20,000
Repayment of bank loan (10,000)
Dividends paid (3,000)
Net Cash Provided by Financing Activities 7,000
Net Increase in Cash and Cash Equivalents 55,000
Cash and Cash Equivalents at Beginning of Year 10,000
Cash and Cash Equivalents at End of Year 65,000

Breaking Down the Cash Flow Statement

Cash Flows from Operating Activities

This section shows the cash generated or used in the core business operations.

  • Cash received from customers: This is the total cash collected from sales of goods or services. In our example, ABC Small Business received $150,000 from its customers.
  • Cash paid to suppliers and employees: This includes all cash paid for operating expenses such as purchasing inventory, paying salaries, rent, utilities, etc. ABC Small Business paid $90,000 to suppliers and employees.
  • Cash generated from operations: This is the difference between cash received from customers and cash paid to suppliers and employees. In this case, it’s $60,000.
  • Interest paid: This represents the cash paid as interest on any loans or borrowings. ABC Small Business paid $2,000 in interest.
  • Income taxes paid: This is the cash paid for income taxes. ABC Small Business paid $5,000 in taxes.
  • Net Cash Provided by Operating Activities: This is the net result of the operating activities, indicating the cash left after paying all operational expenses, interest, and taxes. For ABC Small Business, it’s $53,000.

Cash Flows from Investing Activities

This section shows the cash used for or generated from investing in long-term assets.

  • Purchase of equipment: This is the cash expense for buying new equipment or assets. ABC Small Business spent $10,000 on equipment.
  • Sale of investments: This is the cash profit from selling investments. ABC Small Business received $5,000 from selling some investments.
  • Net Cash Used in Investing Activities: This is the net result of investing activities, showing how much cash the company paid and received from investments. For ABC Small Business, it’s a net outflow of $5,000.

Cash Flows from Financing Activities

This section shows the cash generated from or used for financing the business.

  • Proceeds from bank loan: This is the cash received from taking out a loan. ABC Small Business received $20,000 from a bank loan.
  • Repayment of bank loan: This is the expense amount for loan repayments. ABC Small Business repaid $10,000.
  • Dividends paid: This is the cash distributed to the business owners or shareholders as dividends. ABC Small Business paid $3,000 in dividends.
  • Net Cash Provided by Financing Activities: This is the net result of financing activities, showing the cash raised or repaid. For ABC Small Business, it’s $7,000.

Net Increase in Cash and Cash Equivalents

This is the total change in cash for the period. It combines the net results from operating, investing, and financing activities. For example, in ABC Small Business, the net increase is $55,000.

Cash and Cash Equivalents at Beginning of Year

This is the starting cash balance at the beginning of the period. For ABC Small Business, it was $10,000.

Cash and Cash Equivalents at End of Year

This is the ending cash balance at the end of the period. For ABC Small Business, it’s $65,000.

Why is a Cash Flow Statement Important?

A cash flow statement is important because it provides insights into the liquidity and financial health of the business. Moreover, it helps business owners:

  • Understand Cash Availability: It shows how much cash is available at any given time, ensuring the business can meet its obligations.
  • Plan for the Future: By understanding cash flows, business owners can plan for future expenses, investments, and growth.
  • Identify Trends: It helps identify trends in cash generation and usage, thereby allowing better decision-making.

 

A cash flow statement is a vital tool for any small business. It helps in tracking the movement of cash. Hence, this ensures that the business has enough liquidity to operate smoothly and make informed financial decisions. By understanding each section of the cash flow statement, business owners can gain a clearer picture of their business’s financial health.

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