The Balance Sheet

The Balance Sheet is a measure of the solvency of the business and the degree of the owner’s investment, which, in the last analysis, is the “cushion” that protects creditors. Illustrated below is a typical balance sheet format (applicable to any type of business). Click Here To Download.

The Cash Flow Statement

The Cash Flow Statement is the most critical planning tool for a new or growing business. It shows how much cash will be needed, when it will be needed and where it will come from. It attempts to budget monthly cash needs, and shows the flow of cash into the business from sales, collection of receivables; it shows the flow of cash out of the business through payment of expenses and loans over a period of time. The banker uses this information to analyze possible shortfalls of cash and as a guide to borrowing needs. Your statement should show Cash Flow over the full twelve-month period. This Cash Flow Statement (reprinted from SBA management Aid 1.001 the ABC’s of Borrowing) represents a cash flow statement for a three-month period. Click Here To Download.

By combining the monthly cash flow reports with an income statement for the year and your beginning and ending balance sheet, you will produce a statement of annual cash flow form operations. The monthly cash flow statement shows your need for seasonal borrowing, while the annual cash flow from operations shows the need for longer-term funds.