Almost all companies must have launched an accounting system that is deemed suitable for preparing easy-to-understand financial reports. One of the most commonly used and has a very important function to maintain a business’s financial condition is making a cash flow statement with Irena’s Bookkeeping. Judging from its understanding, the cash flow statement is made with the aim that data from cash flows out and it can be presented in detail and completely. Its presentation which is based on a certain period also makes this report easy to control and is used as reference material for financial reports in the same period or the next.

By looking at the information contained in the cash flow statement, companies can read financial conditions and plan the necessary financial strategies. This report can be used as material for the company’s consideration regarding the need to evaluate net assets. Through a cash flow statement, a company is also able to determine its financial structure, including liquidity and solvency, and make adjustments to cash flow through changes in company circumstances and opportunities.

Another function of the preparation of this report for the company is so that there are no debts or overdue bills to be paid. Not infrequently, companies that get big profits are not even able to pay for their business operational costs. As for the type of funding, reported cash flows are related to the company’s financing activities. This report covers reductions and increases in the capital that occur within a certain time. Finally, the investment cash flow statement consists of cash flows relating to the company’s investment activities in a certain period. Examples of company activities that are included in this type of cash flow statement are the purchase and sale of fixed assets, and investment in shares. As a result, even though the company’s profit is large, the company loses money because the profit is not comparable to the costs incurred to pay employee salaries and buy production materials. For this reason, it is necessary to prepare cash flow statements by companies, even on a small or large scale.

Not only that, but the cash flow statement also has various other important purposes, such as showing the company’s cash flow forecast in the next period and knowing the company’s ability to pay its obligations. The report can also be a basis for decision making so that business performance is more efficient, as well as a report related to net income with changes in company cash.


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