What are the best methods to use for cash flow analysis in your business or personal...

What are the best methods to use for cash flow analysis in your business or personal life?

Expert Solution

A cash flow statement is a listing of the flows of cash into and out of the business.

Best method for cash flow analysis in the business is cash flow statement with indirect method or direct method.

In the indirect method of cash flow we can bifurcate the all cash flow in the three parts that is cash flow from operating activities and cash flow from investing activities and cash flow from financing activities.

So these all parts will give details as per there name like opearing activities will explain the changes in working capital and cash and non cash expenditures in opearing the company.

And cash flow from the investment will show the flow of cash by making new investment or sale of investment.

And Cash flow from finanial activiites will show how the new cash is raised in the business or payment made for the old cash raised.

In the personal life we can maintain the cash flow statement with only two parts like cash inflow and cash outflow. This is the simplest way to maintain the cash flow in personal life

ekkarill92 answered 1 year ago

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