Oh, I made a mistake and broke a streak without any big reason today. It has been busy for my work and family untill yesterday. Finally, today I was so releaved and relased from them thanks to others' help and I started to do accumlated things I wanted to do, e.g., reaching out my frineds to make an appointment, walking around to find brunch place etc. Also, I was too relaxed to think of 200WaD…. I need to accept this and move forward. I cannot change the past and only can change the future.
Back to the planned topic, I am talking about cash flow today as the 3rd part of my weekly theme 'Finance.'
Cash flow statement is one of the three important statements that a company have to publish quarterly and annually. Cash flow statement indicates the actual input and output movement of money. The profit and loss that I wrote yesterday is not necessarily accurate in terms of cash movement. For example, when a company sells a good, the company earn as revenue but cash will be actually collected a few months later. The important characteristics for cash flow is that cash flow does not include the money in the future, only focus on actual cash input and output.
There are three major elements in cash flow: operating, financing, and investing cash flow.
This is the main cash flow that the company usually generate through its sales activities. They are mainly the cash they earn from sales activieis and the ones they pay as costs.
This is the ones to indicate for building new facility, factory, or buying new tools, vehicles etc. as a minus factor or selling such an asset as a plus factor. For example, if you buy a computer $600 with your cash, your investing cash flow is -$600.
This is about borrowing money and returning money for such a debt. If you borrow money $300 from your mom this month, and return the cash $500 to your dad, your financing cashflow is +$200.
Cash is reality, profit is a matter of opinion
Profit and revenue can vary by accountants or companies up to how to categorize their transactions but the cash throughput cannot be changed. Everybody sees cash as the fact.