How to Do a Cash Flow Analysis for Small Businesses
Cash flow analysis is an essential step in business planning. This financial statement helps business owners understand their business's liquidity and overall health. It also allows the owner to take corrective action and improve the situation before it gets out of control. The income statement and balance sheet show the absolute dollar amounts of each account. The statement of cash flows, or SFAS, shows the changes in each account from the prior period to the current period. It resembles the actual transactions in a business's bank account. To do a cash flow analysis for a small business, first, determine the...