Post by asadul5585 on Feb 22, 2024 8:54:48 GMT
Knowing how to analyze cash flow is an essential task for maintaining the financial health of any business. After all, it is through it that you can understand everything that was paid and received in a given period. In general, there are four different types of cash flows: direct, indirect, projected and discounted. Do you know the characteristics and differences between each of them? In this article, we talk about them all and explain how these types can help your business achieve better financial results. Continue reading. What is a cash flow and why is it important? Cash flow allows the manager to have a complete view of all cash inflows and outflows of a business. Therefore, the central role of this tool is to quickly identify the lack or surplus of money, to make better use of resources.
Therefore, this is a very important resource for those who manage a company's finances , as it is capable of keeping those who use it up to date with all financial transactions during certain periods. These transactions, in turn, can be viewed through reports that show all cash inflows and outflows from the business. E-book achieving zero default What Kuwait Mobile Number List are the main types of cash flow There are several ways to carry out this essential control. Therefore, we will explain the purpose of each cash flow, so that you can choose the one or ones that best suit your type of business. 1. Direct cash flow It is the most used type. A cash flow is considered direct when payments and receipts are recorded without making discounts. In other words, only the gross values are considered. This model also categorizes transactions according to the accounting type of each one. For example, receipts from customers from payments to suppliers are separated.
A direct cash flow must present at least the following values: Customer receipts Receipts of interest , profits and dividends Payments to suppliers and employees Interest Payments Payment of Income Tax Other receipts and payments, if any Remember that no discounts should be made on these values, ok? 2. Indirect cash flow Unlike the previous type, here the analysis is made of the company's profits and losses, extracted from a financial indicator called the Income Statement (DRE). In the indirect model, you do not need to control the flow, but balances at the beginning and end of determined periods. Its purpose is only to offer an accounting statement of numbers that were previously collected. Therefore, you will have an organization that comes from the net movement of operational activity accounts, such as accounts payable and receivable and inventory, as well as financing and investment accounts. The big disadvantage of using this type of flow is that the chances of distortions in values are high. Therefore, relying solely on it for a complete cash flow analysis is not the most appropriate way to guarantee reliable financial strategies.
Therefore, this is a very important resource for those who manage a company's finances , as it is capable of keeping those who use it up to date with all financial transactions during certain periods. These transactions, in turn, can be viewed through reports that show all cash inflows and outflows from the business. E-book achieving zero default What Kuwait Mobile Number List are the main types of cash flow There are several ways to carry out this essential control. Therefore, we will explain the purpose of each cash flow, so that you can choose the one or ones that best suit your type of business. 1. Direct cash flow It is the most used type. A cash flow is considered direct when payments and receipts are recorded without making discounts. In other words, only the gross values are considered. This model also categorizes transactions according to the accounting type of each one. For example, receipts from customers from payments to suppliers are separated.
A direct cash flow must present at least the following values: Customer receipts Receipts of interest , profits and dividends Payments to suppliers and employees Interest Payments Payment of Income Tax Other receipts and payments, if any Remember that no discounts should be made on these values, ok? 2. Indirect cash flow Unlike the previous type, here the analysis is made of the company's profits and losses, extracted from a financial indicator called the Income Statement (DRE). In the indirect model, you do not need to control the flow, but balances at the beginning and end of determined periods. Its purpose is only to offer an accounting statement of numbers that were previously collected. Therefore, you will have an organization that comes from the net movement of operational activity accounts, such as accounts payable and receivable and inventory, as well as financing and investment accounts. The big disadvantage of using this type of flow is that the chances of distortions in values are high. Therefore, relying solely on it for a complete cash flow analysis is not the most appropriate way to guarantee reliable financial strategies.