Project Alexandria

6.1c Cash Flow Statement

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Statement of Cash Flows

The statement of cash flows is a financial report that tracks the movement of cash in and out of a company over a specific period. It categorizes cash flows into three main activities, which it equates to net income, such that

The following example shows the trickle-down equation from the starting to the ending cash balance:

\usepackage{tikz}
\usepackage{amsmath}
 
\begin{document}
 
\begin{tikzpicture}
   % Draw table borders
   \draw (0,-1.55) -- (12,-1.55);
   \draw (0,-5.55) -- (12,-5.55);
   \draw (0,-5.65) -- (12,-5.65);
 
 
 
   % Left column text
   \node[anchor=west] at (0.2,0.2) {\textbf{BEGINNING CASH BALANCE}};
   \node[anchor=west] at (0.2,-0.8) {\textbf{CASH RECEIPTS}};
   \node[anchor=west] at (0.2,-1.3) {\textbf{CASH DISBURSEMENTS}};
   \node[anchor=west] at (0.2,-1.8) {\textbf{CASH FROM OPERATIONS}};
   \node[anchor=west] at (0.2,-2.8) {\textbf{CAPITAL EXPENDITURES}};
   \node[anchor=west] at (0.2,-3.3) {\textbf{NET BORROWINGS}};
   \node[anchor=west] at (0.2,-3.8) {\textbf{INCOME TAXES}};
   \node[anchor=west] at (0.2,-4.3) {\textbf{SALE OF STOCK}};
   \node[anchor=west] at (0.2,-5.3) {\textbf{ENDING CASH BALANCE}};
 
   % Right column values
   \node[anchor=west] at (7,0.2) {A};
   \node[anchor=west] at (7,-0.8) {B};
   \node[anchor=west] at (7,-1.3) {C};
   \node[anchor=west] at (7,-1.8) {B - C = D};
   \node[anchor=west] at (7,-2.8) {E};
   \node[anchor=west] at (7,-3.3) {F};
   \node[anchor=west] at (7,-3.8) {G};
   \node[anchor=west] at (7,-4.3) {H};
   \node[anchor=west] at (7,-5.3) {A + D - E + F - G + H = I};
\end{tikzpicture}
 
\end{document}

The statement of cash flows serves as a bridge between the income statement and the balance sheet by tracking the movement of cash within a company. It adjusts net income from the income statement and explains changes in balance sheet accounts to show how much cash was generated or used.

Accrual vs. Cash Accounting when cash actually moves.

Whereas the balance sheet and the income statement are accrual (they recognize revenue and expenses when incurred), the statement of cash flows reports transactions 

\usepackage{tikz}
\usepackage{amsmath}
 
\begin{document}
 
\begin{tikzpicture}
    % Draw table borders
    \draw (0,-1.55) -- (12,-1.55);
    \draw (0,-5.55) -- (12,-5.55);
    \draw (0,-5.65) -- (12,-5.65);
 
 
 
    % Left column text
    \node[anchor=west] at (0.2,0.2) {\textbf{BEGINNING CASH BALANCE}};
    \node[anchor=west] at (0.2,-0.8) {\textbf{CASH RECEIPTS}};
    \node[anchor=west] at (0.2,-1.3) {\textbf{CASH DISBURSEMENTS}};
    \node[anchor=west] at (0.2,-1.8) {\textbf{CASH FROM OPERATIONS}};
    \node[anchor=west] at (0.2,-2.8) {\textbf{CAPITAL EXPENDITURES}};
    \node[anchor=west] at (0.2,-3.3) {\textbf{NET BORROWINGS}};
    \node[anchor=west] at (0.2,-3.8) {\textbf{INCOME TAXES}};
    \node[anchor=west] at (0.2,-4.3) {\textbf{SALE OF STOCK}};
    \node[anchor=west] at (0.2,-5.3) {\textbf{ENDING CASH BALANCE}};
 
    % Right column values
    \node[anchor=west] at (7,0.2) {A};
    \node[anchor=west] at (7,-0.8) {B};
    \node[anchor=west] at (7,-1.3) {C};
    \node[anchor=west] at (7,-1.8) {B - C = D};
    \node[anchor=west] at (7,-2.8) {E};
    \node[anchor=west] at (7,-3.3) {F};
    \node[anchor=west] at (7,-3.8) {G};
    \node[anchor=west] at (7,-4.3) {H};
    \node[anchor=west] at (7,-5.3) {A + D - E + F - G + H = I};
\end{tikzpicture}
 
\end{document}

Graph View