Cash flow statement As well as determining whether the business has made a profit during the week ending 9 January, a business owner needs to know if they have enough cash coming into their business to cover the various costs that will have to be paid. Using the data from the two journals, the bookkeeping software can produce a cash flow statement that provides this information. This statement would be prepared as shown in FIGURE6 .
SkillBuilder discussion Investigating Study FIGURES5 and 6 . Based on what you know about this business, what opportunities might exist in the future? Think about how it can improve its situation or take advantage of a market opportunity.
FIGURE6 A cash flow statement for a cafe
Café Cash flow statement for the week ended 9 January 2022
$
$
Cash inflows Total sales revenue
7190.00
Other cash inflows (bread refunds)
210.00
Total cash inflows
7400.00
Cash outflows
Bakery Groceries
1000.00 1220.00
Wages Utilities
600.00 490.00
Total cash outflows
3310.00
Net cash flow
4090.00
The net cash flow figure is the amount calculated by subtracting total cash outflows (or payments) from total cash inflows (or receipts). In this case, the figure for net cash inflow was the same as the net profit figure ($4090.00). As the net cash flow is positive, the cafe is bringing in enough cash to cover expenses. 22.4.4 Entrepreneurs and business We have already seen that business owners need to know their revenue and their costs so they can calculate how much money they have made. An entrepreneur needs to know this information as well. Having a good idea or developing a unique product is just the start. Turning this idea or product into a business that will support a person financially can be a different task. An entrepreneur needs to plan and budget correctly, identifying the costs involved in turning an idea into a business, sourcing the required finance and determining the price they will sell this product for — they need to make a profit from their idea. Television shows such as Shark Tank show how entrepreneurs need to source finance, often selling some of their business to an investor to allow them to grow into a sustainable business.
TOPIC22 Financial goals and decision-making 641
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