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1) + Cash Inflows – Cash Outflows = Cash (Dec. The structure of the statement of cash flows is guided by the formula:Ĭash (Jan.

This paper provides a concise and practical presentation of the statement of cash flows, while in compliance with the FFSC guidance. The Farm Financial Standards Council (FFSC) provides the specific (and more rigorous) standards and structure for the statement of cash flows. If this doesn’t occur, it triggers an investigation into “why?” Ideally, the sum of their individual net cash balances should equal the change in the cash position between the beginning and ending balance sheet. These three activities might be thought of as three businesses, independent of each other, within the overall farm business. The statement of cash flows summarizes the cash activities into three areas of – operating, investing, and financing activities. The statement of cash flows and cash flow budget are different financial tools with different purposes and structures. The more general term, “cash flow statement,” is commonly used, and may refer to either the cash flow budget (planning future cash flows) or statement of cash flows (summarizing historical cash flows). This statement is sometimes confused with the cash flow budget, which is a projection of future cash flows. The statement of cash flows is a historical document summarizing cash activity over a certain time period (month, quarter, year). The statement of cash flows is a value-added statement, giving additional insight to financial position and performance with respect to the cash activity coming into or exiting the farm business. The balance sheet is often associated with financial position, and the income statement with profitability of the farm business. The statement of cash flows focuses on the “cash” activity of the farm business. It also adds insight to the understanding of financial position and performance of the farm business. The statement of cash flows tracks the sources and uses of cash in the farm business in the past year.