ChatGPT Prompt: Small Business Cash Flow Statement Template
A cash flow statement helps measure how well a company generates cash to pay its debts year over year. This ChatGPT prompt is perfect for any small business owner just starting out to help them stay on track. Being able to modify this prompt to fit your businesses needs can help in the long run in making sure you have the perfect cash flow statement template.
You are a small business CPA for the state of ohio. I need you to help me understand what a Cash Flow statement is and how to fill one out. Provide an example of the sections that provide cash such as operating activities, investing activities, and financing activities. Provide the cash flow statement template in a table format.
As a CPA, I’d be happy to help you understand what a Cash Flow statement is and how to fill one out.
A Cash Flow statement is a financial statement that shows the cash inflows and outflows of a business over a specific period of time. It is important because it provides a clear picture of a company’s ability to generate cash and meet its financial obligations.
There are three main sections of a Cash Flow statement: operating activities, investing activities, and financing activities.
- Operating activities: This section includes cash inflows and outflows related to a company’s core business operations. For example, cash received from customers for goods or services sold, or cash paid to suppliers for inventory.
- Investing activities: This section includes cash inflows and outflows related to a company’s investments in assets such as property, plant, and equipment. For example, cash paid for the purchase of a new factory or cash received from the sale of an investment.
- Financing activities: This section includes cash inflows and outflows related to a company’s financing activities, such as issuing or repurchasing stock, or borrowing or repaying debt. For example, cash received from issuing bonds or cash paid for dividends to shareholders.
Here’s an example of a Cash Flow statement template in a table format:
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Net income | $10,000 | $12,000 | $15,000 |
| Depreciation expense | $2,000 | $2,500 | $3,000 |
| Changes in working capital | ($5,000) | ($2,500) | $1,000 |
| Net cash provided by operating activities | $7,000 | $12,000 | $19,000 |
| Cash flows from investing activities | |||
| Purchase of property, plant, and equipment | ($8,000) | ($10,000) | ($12,000) |
| Proceeds from sale of investment | $1,000 | $2,000 | $3,000 |
| Net cash used in investing activities | ($7,000) | ($8,000) | ($9,000) |
| Cash flows from financing activities | |||
| Issuance of stock | $5,000 | $10,000 | $15,000 |
| Payment of dividends | ($3,000) | ($4,000) | ($5,000) |
| Net cash provided by financing activities | $2,000 | $6,000 | $10,000 |
| Net increase in cash | $2,000 | $10,000 | $20,000 |
| Beginning cash balance | $5,000 | $7,000 | $17,000 |
| Ending cash balance | $7,000 | $17,000 | $37,000 |
In this example, the Cash Flow statement shows that the company generated positive cash flow from operating activities in each year, despite changes in working capital. The company also invested in new property, plant, and equipment in each year, resulting in negative cash flow from investing activities. Finally, the company financed its operations and investments through the issuance of new stock and the payment of dividends, resulting in positive cash flow from financing activities. Overall, the company had a net increase in cash each year and ended each year with a positive cash balance.
What if I am a small business that does not issue or sell stock due to how small of a company I am
If your small business does not issue or sell stock, then you would not have any cash flows related to financing activities in your Cash Flow statement. In this case, you would only need to include the cash inflows and outflows related to operating activities and investing activities.
The operating activities section would include cash inflows and outflows related to your core business operations, such as cash received from customers for goods or services sold, or cash paid to suppliers for inventory. This section might also include cash flows related to interest and taxes.
The investing activities section would include cash inflows and outflows related to your investments in assets such as property, plant, and equipment. For example, cash paid for the purchase of new equipment or cash received from the sale of an asset.
Here’s an example of a simplified Cash Flow statement for a small business that does not issue or sell stock:
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Cash received from customers | $50,000 | $60,000 | $70,000 |
| Cash paid to suppliers and vendors | ($30,000) | ($35,000) | ($40,000) |
| Cash paid for interest | ($2,000) | ($2,500) | ($3,000) |
| Cash paid for taxes | ($5,000) | ($6,000) | ($7,000) |
| Net cash provided by operating activities | $13,000 | $16,500 | $20,000 |
| Cash flows from investing activities | |||
| Purchase of property, plant, and equipment | ($10,000) | ($12,000) | ($15,000) |
| Proceeds from sale of an asset | $1,000 | $2,000 | $3,000 |
| Net cash used in investing activities | ($9,000) | ($10,000) | ($12,000) |
| Net increase in cash | $4,000 | $6,500 | $8,000 |
| Beginning cash balance | $5,000 | $9,000 | $15,500 |
| Ending cash balance | $9,000 | $15,500 | $23,500 |
In this example, the Cash Flow statement shows that the small business generated positive cash flow from operating activities in each year, despite paying interest and taxes. The company also invested in new property, plant, and equipment each year, resulting in negative cash flow from investing activities. Overall, the company had a net increase in cash each year and ended each year with a positive cash balance.
Conclusion
This chatgpt cash flow statement prompt will be a good way to keep on top of your small businesses finances. Check out more of our chatgpt prompts here.
