Cash Flow

Easy ERP accounting software grants you a wide variety of financial reports that can help you to value the profit of your company. One of the most convenient instruments for this type of analysis is the cash flow statement.

In EasyERP, a cash flow statement, also known as the statement of cash flows. It is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents. And analyzes how they are changed by operating, investing and financing activities.

Complementing the balance sheet and income statement, the cash flow statement (CFS) – is a mandatory part of a company’s financial reports since 1987 – records the amount of cash and cash equivalents entering and leaving a company. The CFS allows investors to understand how a company’s operations are running, where its money is coming from, and how it is being spent.

People and groups interested in cash flow statements include:

  • Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses
  • Potential lenders or creditors, who want a clear picture of a company’s ability to repay
  • Potential investors, who need to judge whether the company is financially sound
  • Potential employees or contractors, who need to know whether the company will be able to afford compensation
  • Shareholders of the business

To open up the cash flow statement in the EasyERP accounting software simply tap the corresponding button in the Accounting menu:

EasyERP cash flow report menu

When you will open up this segment, you will see a table, that divides all the income into three sources, depending on the origin of the cash:

  • Cash flows from operating activities
  • Cash from flows from investing activities
  • Cash flow from financial activities

Here you can see an example of this table:

EasyERP cash flow report example

And the result that is displayed at the bottom of the table called the Net cash flow, it is a result of subtraction of cash flows from investing and financial activities from the cash flow from operating activities.

Also, as you may notice, there is a calendar tool at the top of the page. With its help, you can view a cash flow report for any period you like, simply tap on it and you will be presented with a few standard periods of time and a custom date tool, where you can set the dates manually.

EasyERP accounting software provides you with a great advantage, you can open up every one of this flows, to discover their origin in the details. All up to the exact number of documents that have provided with a current cash flow. They are opened in a tree like structure, so it is very easy to research all your cash flows in detail.

Let us break down the mentioned activities that generate cash flows:

  • Operating activities – converts the item reported on the income statement from the accrual basis of accounting to cash
  • Investing activities – reports the purchase and sale of long-term investments and property, plant, and equipment
  • Financial activities – reports the issuance and repurchase of the company’s on bonds and stock and the payment of the dividends

Using EasyERP’s cash flow report a company can predict future cash flow, which helps with budgeting. For investors, the cash flow reflects a company’s financial health: basically, the more cash available for business operations, the better. However, this cannot be the rule of thumb. Sometimes, a negative cash flow results from a company’s growth strategy in the form of expanding its operations.

By adjusting earnings, revenues, assets and liabilities, the investor can get a very clear picture of what some people consider the most important aspect of a company – how much cash it generates and, particularly, how much of that cash stems from core operations.