QuickBooks Financial Statements: A Complete Guide

The cash flow statement is an essential tool for investors, creditors, and management to gauge the financial health and performance of a business, ultimately contributing to informed strategic actions and sustainable growth. It serves as a crucial tool for businesses, especially small businesses, as it helps in understanding how money is moving in and out of the company. By detailing the sources and uses of cash, it enables management to make informed decisions about the company’s financial health and stability. Developing a cash flow statement is essential to understanding how well you can cover your current liabilities using your current assets, also known as your business’ liquidity. Think of a cash flow statement as a snapshot of your company’s cash on hand. Through this proactive approach, organizations can navigate unexpected market shifts and capitalize on growth opportunities, ensuring sustainable financial health and agility in dynamic economic environments.

  1. This process involves navigating to the ‘Reports’ section in QuickBooks and selecting the ‘Cash Flow Statement’ option.
  2. By analyzing the cash flows from investing activities, stakeholders can assess the company’s ability to generate future cash flows and its commitment to long-term value creation.
  3. If your business purchases or sells an asset for cash, you’ll post the impact here.
  4. A statement of cash flows can break down your inflows and outflows every month or year to help you better understand your business’s spending habits.
  5. Download QuickBooks cash flow statement template no matter what type of business you have.
  6. All reports will use your data in QuickBooks, so you want to make sure you have a clean starting point.

The extra cash might be used to pay a dividend to investors, or it can be retained in the business to expand operations. Here’s an example of the direct cash flow statement for the sample company ABC Corporation. On the other hand, having too much cash or cash equivalents on hand can be a sign that you’re not taking full advantage of your liquid assets. To save money in the long run, you may want to use cash to pay down high-interest debts, for example. Using your upcoming bills and cash on hand, see how your cash flow looks for the next six weeks by creating a cash flow projection.

Using the bill tracker in QuickBooks, you can identify your pending and unpaid bills. Integrating data analytics into your business can help your revenue grow, the organization mitigate risk, or gain insight into your business operations. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.

The financing cash flow provides insights into how a company is funded and its capital structure. Positive cash flows in this section may indicate successful fundraising activities, while negative cash flows may indicate debt repayment or stock repurchases. Analyzing cash flow trends within a statement enables businesses to track the trajectory of their cash position, conduct insightful financial analysis, and derive valuable insights for financial reporting and decision-making. Operating activities in a cash flow statement cover the inflows and outflows related to the core revenue-generating functions of a business, reflecting its cash flow performance and facilitating cash flow analysis.

Interpreting the Cash Flow Statement

Please note that this report type is currently only available in QuickBooks Desktop Edition, not QuickBooks Online Edition. Download a free cash flow statement template, learn how to prepare a statement, and discover the direct and indirect methods of cash flow statements. In the same tool within QuickBooks Online, you can add future items and analyze your potential income. In some cases, your cash flow may be negative for the first month or even a couple of months. But the new opportunity could provide a big spike in revenue when your customer pays and leads to more earning potential down the line through future projects.

Financing Activities

A cash flow statement, along with the balance sheet and income statement, is one of the primary financial statements used to measure your company’s financial position. It tracks the cash inflow and cash outflow of cash from operating, investing, and financing activities during a given time period. The term “cash” refers to both cash and cash equivalents, which are assets readily convertible to cash. This financial statement provides relevant information to assess a business’s liquidity, quality of earnings, and solvency.

Statement of cash flows is important because it shows your company’s actual cash position to fund operating expenses and debt obligations. The liquidity of your company will be illustrated in a statement of cash flows. This method deducts cash out from cash in by focusing on cash inflows and cash outflows of cash from operating activities. Examples of receipts under the direct method include cash collected from customers and cash received from interest and/or dividends. Examples of disbursements under the direct method include cash paid to suppliers for goods, cash paid to employees for services, and cash paid to creditors for interest and tax payments. These activities play a pivotal role in shaping a company’s financial health and performance.

For banks and creditors, your cash flow statement provides some reassurance that your small business is able to pay back its loans or fund its own operating expenses. The cash flow forecast shows you estimates of your incoming revenue for a certain period. Typically, you have a short-term forecast that gives you visibility into the near future and a long-term view that assists you with larger plans.

Statement of cash flows template

With this great new feature in QuickBooks Desktop 2021, you will easily meet both types of Statement use requirements in a time-saving way that boosts productivity. Remember, you can set up as many different Statement schedules and statement related customer groups as you need. So, we have previously covered the process of configuring Customer Groups in our article of September 11, 2020, and we will therefore cover that aspect of ‘using Automated Statements’ on a cursory basis in this article. You can use QuickZoom to proof the balances on A/P and A/R on the Cash Basis Balance Sheet by displaying the transactions behind the numbers displayed on the Balance Sheet. If you haven’t already, consider using our free template to craft a new business plan that addresses your needs and goals as a growing business.

QuickBooks profit and loss statement

QuickBooks also has a Cash Flow Projector feature that is optimized for short-term forecasts. You get a good look at the next six weeks of your company’s financial future, which works well when you’re ensuring that all the bills and employees will get paid in the next month. Start by determining your operation’s net income and then converting the accrual net income into operating activity cash flows.

A balance sheet is a statement of the assets, liabilities and equity of a business — essentially a snapshot of your business value at a specific point in time. Balance sheet items are calculated by subtracting your liabilities — what you owe — from your assets, cash or property — what you’re own or is owed to you. The direct method requires a reconciliation document to supplement the cash flow statement, while the indirect method requires a net income starting balance to begin.

Operating Activities

A balance sheet is a snapshot of a company’s financial position as of a specific date. An income statement reports revenue, expenses, and net income for a specific period of time. The statement of cash flows helps a business owner understand the differences between net income and the activity in the cash account. You can only make informed decisions with confidence for your business if you know where you stand financially.

Regular expenses include items such as rent, utilities, loan repayments, and similar costs. Fluctuating expenses include things like payroll and the costs of goods sold. Click Reports in the left menu bar and then click on the Business overview section.

That’s why we’ve partnered with QuickBooks Online to make applying and accounting for invoice factoring a cinch. See our blog on the definition of invoice factoring for more information about it and how it helps quickbooks items businesses like yours grow and improve future cash flow by avoiding potential cash flow problems. While profit is a measure of revenue minus expenses, cash flow focuses on the actual movement of cash.