Legal Definitions - cash flow statement

A cash flow statement is a financial document that shows how much money is coming in and going out of a business during a specific period of time. It helps businesses understand their cash position and how they are managing their finances.

For example, if a business has $10,000 in sales revenue but also has $8,000 in expenses, their cash flow statement would show a positive cash flow of $2,000. This means they have more money coming in than going out.

Another example could be a business that has a loan payment of $1,000 due in a month. If they only have $500 in cash on hand, their cash flow statement would show a negative cash flow of $500. This means they will need to find a way to generate more cash or cut expenses to avoid running out of money.

Overall, a cash flow statement is an important tool for businesses to manage their finances and make informed decisions about their operations.