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The first 5 numbers to look at in a cash flow statement
 

The first 5 numbers to look at in a cash flow statement

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When a client hands you a set of financial statements you have to find something to say pretty quickly. This presentation shows you what to look at in the cash flow statement and suggests some ...

When a client hands you a set of financial statements you have to find something to say pretty quickly. This presentation shows you what to look at in the cash flow statement and suggests some questions that you could ask.

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    The first 5 numbers to look at in a cash flow statement The first 5 numbers to look at in a cash flow statement Presentation Transcript

    • The first 5 numbers to lookat in a cash flow statementfrombusinessbankingcoach.comin association with
    • Here’s the scenario:the client has justgiven you the financialstatements for thebusiness and youhave to say somethingquickly – here’s whatto look at in the cashflow statement withsome questions to ask
    • A cash flow statement is neveran easy document to read, that’swhy we want to focus on thesethree main points to keep itsimple and to give you an idea ofwhat happened to the cash in thebusiness during the period
    • How much cash was left at the end ofthe period (usually a year)?Was the change in the amount of cashleft positive or negative from theprevious year?What happened to the cash in each ofthe three sections of the cash flowstatement - operating, investing andfinancing?
    • 1st numberCash at endof year
    • 1st numberCash at endof yearHas the number gone up from previousyear or gone down?
    • 1st numberCash at endof yearIs the trend likely to continue in the currentyear?Has the number gone up from previousyear or gone down?
    • 2nd numberNet changein cash
    • 2nd numberNet changein cashHas the number gone up from previousyear or gone down?
    • 2nd numberNet changein cashWhich section of the cash flow statementcontributed most to the change?Has the number gone up from previousyear or gone down?
    • 3rd numberNet cash flow -financing activities
    • 3rd numberNet cash flow -financing activitiesHas the total number gone up fromprevious year or gone down?
    • 3rd numberNet cash flow -financing activitiesDid the change in short-term liabilitiesgenerate cash (more risk) or utilise cash(less risk)?Has the total number gone up fromprevious year or gone down?
    • 3rd numberNet cash flow -financing activitiesDid the change in short-term liabilitiesgenerate cash (more risk) or utilise cash(less risk)?Are increases in long-term liabilities matchedby increases in non-current assets in cashfrom investing activities section?Has the total number gone up fromprevious year or gone down?
    • 4th numberNet cash flow -investing activities
    • 4th numberNet cash flow -investing activitiesHas the number gone up from the previousyear or gone down?
    • 4th numberNet cash flow -investing activitiesWere non-current assets disposed of togenerate cash? Were they productiveassets?Has the number gone up from the previousyear or gone down?
    • 4th numberNet cash flow -investing activitiesWere non-current assets disposed of togenerate cash? Were they productiveassets?Are new investments productive?Has the number gone up from the previousyear or gone down?
    • 5th numberNet cash flow -operating activities
    • 5th numberNet cash flow -operating activitiesHas the number gone up from the previousyear or gone down?
    • 5th numberNet cash flow -operating activitiesIs the cash flow from operations positive?If not, how will that be reversed in thecurrent year?Has the number gone up from the previousyear or gone down?
    • 5th numberNet cash flow -operating activitiesIs the cash flow from operations positive?If not, how will that be reversed in thecurrent year?How did changes in working capital (stockand trade debtors) affect cash flow?Has the number gone up from the previousyear or gone down?