Business operations of any organization whether a consortium or a small

Business operations of any organization whether a

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Business operations of any organization whether a consortium or a small business, are entirely based on the money matters which means that the cash in and outflows indicate the success or the adversity of that very business. There are three sections of any cash flow statement which are discussed and mentioned in this paper. According to Behnam (2013), the first section of the cash flow statement (CFS) is named as the operating activities. This section shows the received cash in the financial system of the business and thus spent on the daily expenses of the operational activities. The current liabilities and assets are indicated in the ledger according to the changes made to the relevant balances. There are specific accounts which are exhibited in this section such as accounts payable AP, accounts receivables AR, the prepaid money paid for the insurance plans and the 29
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revenues which are yet to be earned. The daily sales reports are accounted in this section which is the most important part of the whole business operations. The second section is identified as the investment activities in which the investments made by the company are listed. In other words, the procurement of any kind of equipment and property will be accounted in this section. This section enlists those investments which may include as the purchasing of vehicles, major equipment, land for the company premises for manufacturing/processing and the office buildings, and the long term investments. The third and the last section is the financing section which records the financing activities. The significant information related to the financing decisions and activities, is mentioned under this head which exhibit all the records of the payments made as dividends to the shareholders, purchasing activities of stocks and bonds. There are other sets of information which are called as the supplemental information which shows the transactions under the interests that the company may earn or pay on any investments/loans and tax information on the income that is made by the company. This is the last sections where the CFS concludes, moreover, this part of the CSF may also show the exchange of items or equipment which are not related to the cash in/out flows. Cash Flow Analysis and Its Benefits There are certain and obvious benefits of the cash flow analysis process which are as follows: First of all, the cash flow analysis helps the company management to monitor the expected dates of cash inflows and thus, the management can plan certain cash outflows such as paying the salaries or preparing the accounts for the payroll according to the expected and 30
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planned schedules. This is the management technique to avoid hiccups and to resolve problems through shrinking the time periods of the expected cash inflows.
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