Statement of Cash Flow
Posted by Robin Helweg-Larsen on Thu, Sep 02, 2010 @ 09:40 AM
At Andromeda Training, we suspect the Statement of Cash Flow is unnecessary.
Traditionally, it has been a useful tool for understanding cash flow. If all you have are columns of numbers from the Income Statement and Balance Sheet, then a Statement of Cash Flow can help you visualize the changes in position from one year to the next and the impact of those changes on your cash situation, your borrowing needs, and so on.
But, with the Income/Outcome gameboard and the use of the Company Board, you don’t need more columns of numbers to visualize cash flow: you can see at a glance how your cash flow works, and also get a sense of the likelihood of being able to improve any individual line item.
We believe in Cash Flow Forecasts as essential tools especially when planning an expansion or new operation. But as for the Statement of Cash Flow, although we are also prepared to teach its use, we think it is a poor substitute for a visual understanding of a business situation.