![]() ![]() But to truly understand how well your business is performing, you should be preparing a statement of cash flows regularly (at least quarterly) and separating the statement into the three main types of cash flows: from operating activities, investing activities, and financing activities. Positive cash flow indicates that a company’s liquid assets and may indicate more financial flexibility. It’s important to remember that cash flow differs from profit. The term cash flow is used to describe the amount of cash that is generated or spent within a certain time frame. Cash flow is the money that streams in and out of your small business-and it’s a key indicator of your company’s overall financial health.
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