How much of the liquid assets derive from the business operations? Have new loans been raised or, perhaps, additional funds been received through shareholder contributions? How much money was received in the sale of a subsidiary?
How has the money been used? Are there operations under development that have perhaps generated less money than the business has paid out? How much money has been spent on buying equipment or perhaps a property? Or did the shareholders receive the money in the form of dividends?
A cash flow statement describes the flow that has already taken place, but it also sends clear signals that, combined with other knowledge about the operations, can provide indications of what lies ahead. Will the company need more capital to continue its business operations? Is there enough money available to conduct present operations and acquire those new operations that management might want? Or will the shareholders have to be consulted to borrow more money?
A cash flow statement is included as a compulsory part of the consolidated financial statements when they are presented in an annual report.
Mazars can help businesses to produce a cash flow statement or show them a method that, with a little training, can enable them to produce one for themselves.