Cash Flow help you run your business better

What is cash flow?

  Cash flow is the amount of cash when running the business for a period. Cash flow can be the index of the financial condition of a company. Cash flow statement can reflects the specific condition of a company so that it can help us improve our company and make more profit.

Why cash flow is important?( The relationship between company and cash flow statement)

1. Cash Flow Statement can help your investor learn the financial condition of your company so that he can make decision. You can see from the cash flow statement that your operating, investing and financing situation. For instance, if a business man wants to invest your company, he has to know your cash flow statement as he can see that if your company make money from the business. If your cash provided by operating is insufficient, which means your company just start or it does not run very well. By this situation, the investor can give up investing your company.

2. Cash Flow Statement can help you analyze your company and you can make improvement from it. You can see from the cash flow statement that if you have enough money to expand your company. For example, you can see that if your cash provided is insufficient. If you do not have enough money from the financing activities, which means you can issue more bonds and shares, or you can get some bonds back so that you can pay less dividend.

How to increase our cash flow?

1. By increasing the cash from operating. Like you can improve your product so that you can sell more. You can also increase it by decrease the cost of goods sold, like find a better merchandise.

2. By increasing the cash from investing activities. For instance, you can sell your old equipment or building to get cash and make money from it. You can also try to save money on equipment and make more profit.

3. By increasing the cash from financing activity. You can encourage more people to buy your shares or bonds, like give them cheaper price and higher interest. You can also pay you dividend on time so that they can trust you and buy more shares or bonds.