Technical Reading Ii Management 206

UNIVERSIDAD COOPERATIVA DE COLOMBIA “Profesionales con Criterios Políticos” Villavicencio – Meta – Colombia

Faculty of Management English III – Group 206 – Technical reading II Name: _______________________________

Code: __________ Date ______________

Cash Flow - What is Cash Flow See More About:cash flowcash flow analysiscash budgetstatement of cash flows Definition: A firm's cash flow is the movement of cash in and out of the firm in the form of payments to suppliers and collections from customers. Cash flows typically arise from three sources: operations, investing, and financing. Business firms must file a Statement of Cash Flows as one of their required financial statements. The Statement of Cash Flows shows the movement of cash through operations (current assets and liabilities), investing (plant and equipment and investments), and financing (long-term financing and dividends). Cash flows are essential to the liquidity or solvency of the business firm. Cash flows are not the same thing as profit. Profit is arrived at through developing the income statement by accrual accounting. In order to develop the Statement of Cash Flows, you take the data from the income statement and use cash accounting to convert profit to cash flows. Companies need to keep a close eye on their cash flows. To do this, they should develop cash budgets on at least a monthly basis. Developing a cash budget means comparing cash receipts or revenues with cash disbursements or payments and determining net cash flow. This is how the small business owner knows how much cash is available each month. Vocabulary: Postdated check: Cheque postfechado Assets: Activos Ledger: Huesped, inquilino Sales Invoice: Factura de venta Restricitive endorsement: Endoso restrictivo Net income: Ingreso neto Petty cash: Dinero de caja menor Vendor: Vendedor Merk up: Margen de ganancia Expenses: Gastos