Chapter 43: Cashflow statement

Reporting period

the specific time frame a company uses to report its financial performance, such as income, expenses, and profit.

Depreciation

Represents reductions in the values of the firm’s equipment (although no actual cash leaves the company)

Cashflow statement

Shows cash inflows and outflows, money that actually comes in and goes out of a company in a particular period

Cash inflows

Money coming into a company, usually from activities like sales, investments or loans.

Cash outflows

Money going out of a company, such as payments for expenses, salaries, rent, buying equipment …

Cashflow problems

Problems that occur when a company doesn’t have enough cash to cover its expenses, even if it’s profitable. Causes

Credit terms

Conditions under which a seller extends credit to a buyer, like payment period, discounts for early payment. It also answers the question

Credit period

Amount of time a buyer has to pay for goods or services purchased on credit.

Net cashflow from operations

Money generated by the sales of the company’s goods or services minus money spent on supplies, staff salaries … in the period

Generated

Produced or created

Net cashflow from investment activities*

Inflows

Net cashflow from financing activities*

Inflows

Net cash position

Adding and subtracting the figures above*, the company calculates its Net cash position at the end of the year. In short, Net cash position refers to the amount of cash a company has after subtracting its debt.