Now that we know what the cash flow statement shows, let’s look at the details. So we have two statements: The income statement shows what the company earned in the past year, and the cash flow statement tracks how much money it received and what it paid out. Profitable companies can run out of cash, and companies with plenty of cash can be unprofitable. That applies just as much in the corporate world as it does for you and me. There’s often a disconnect between when you earn money and when you actually receive the funds in your account. That, in a nutshell, is the difference between cash and profit.
You make a good salary, and you cover your expenses each month, so in corporate terms you’re “profitable.” But until that next paycheck hits your bank account, ATMs will keep telling you “transaction declined.”
It’s the day before payday, and your bank account is almost empty. Here’s a situation most of us have been in at one time in our lives. or in other countries.īy the end of the tutorial, you’ll have a clear idea of what the cash flow statement can tell you about a company’s health, understand how it fits in with the other two main financial statements, and feel confident reading the cash flow statement of any company. Then you’ll take what you’ve learned and apply it to a real-world example: the accounts of technology giant Apple Inc.įinally, you’ll learn about any variations you might come across in how the information is presented, either in the U.S. You’ll start by learning the purpose of the cash flow statement and how it’s structured, and then you’ll dive into the details and go through line by line to understand what each part means.
So that leaves one more story to decipher: the cash flow statement. The income statement, we discovered, was a tale about how much profit the company made, and the balance sheet told us what the company owned and how much it owed.
Cashflow game for macbook pro how to#
Learn how to read a cash flow statement in this tutorial. Learn a few simple steps to decode the story, and you can read it as easily as you’re reading this tutorial. In the previous tutorials in this series, we saw that complex-looking financial statements are actually just a company’s way of telling its story.
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