Cash Flow Statement is an important part of finance and accounting. The cash flow statement is normally considered less important than the income statement and balance sheet, but it is frequently used to differentiate ongoing trends in business performance for those organizations which deal with multiples of products and services. Great many students throughout the year contact BookMyEssay to avail professional assignment writing help for completing their assignments on Cash Flow Statement. There are many aspects in this topic that keeps the students confused while writing down assignments out of their own knowledge. BookMyEssay links these students with the most expert writers in this field to make this assignment writing job easy, fast and well within deadlines.
As the name suggests, it traces the cash flow in and out of an organization. It is a tool for the finance and accounts department of a company to focus on the types of activities that helps in cash flow in an organization. For the external auditors, this statement is needed to point out discrepancies and inspect unnatural cash sources of a business.
It is also useful when there is a deviation between the amount of profits reported and the amount of net cash flow generated. Cash flow and net income are not the same things. Students must have clear understanding on these two vital aspects in accounting. Cash flow takes into account all financial activities while net income calculation takes into account non-financial activities also, like depreciation of machineries are considered for calculating net income from a business operation.
Cash flow statement is prepared for three basic categories as stated below –
Cash Flows from Operations = Net income generated + Noncash Expenses + Changes in working capital
Cash flow statement is presented in two ways, viz. the direct method and the indirect method. The direct method needs the business to present cash flow statement that is directly related with cash flow items, such as
Without timely knowledge on all these cash flow ‘factors’, a cash flow statement could not be prepared. So, accumulation and integration of all these information is required for the direct method.
Otherwise, it is better to use indirect method. Under the indirect method, the statement is opened with the net income or loss as shown in the company’s in the income and expenditure statement. Some adjustments are then made to this figure to arrive at the net cash provided by operating activities.
The above discussion makes it clear that cash flow statement is important from an organization’s point of view. It helps the management at any given point of time to take any decision where huge expenditure is involved. A positive cash flow makes it clear that company is going healthy while a negative cash flow indicates that a need of investment is their immediately or in future. As a whole, cash flow statement shows an organizations health at any point of time.
Assignments on cash flow statement are always tough to accomplish because these assignments always involve lots of minute calculations and interpretations. In most of these assignments, the students are asked to create a cash flow statement after extracting data from the given problem. They are also asked to interpret the statements that they have prepared from the given data. All these aspects in an assignment related to cash flow statement needs intense knowledge on the subject as also analytical capability.
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