Duggal Professional Corporation

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Ph. 780 863  2224,    info@taxcounting.com


Why Is Cash Flow Important?

If you want your business to be as healthy as possible, it’s imperative to have an adequate amount of cash in the drawer (or the bank account). Irrespective of what assets your business owns, it’s always the cash that keeps your operations running.


What is cash flow?


A cash flow statement is one of the most important financial statements that your business will need to keep track of its finances. The primary aim of a cash flow statement is to record the cash inflows and outflows that take place within a certain time period and calculate the net cash flow value. The cash flow statement is often used in tandem with a balance sheet and income statement as their third important component.


Why is the cash flow important?


A cash flow statement is a very clear, concise, and to-the-point depiction of how well the company is doing in terms of its cash position. Any business needs to have sufficient cash at all times to sustain its operations and for any sort of contingency situation. As a company, you need cash to pay your salaries, pay your utilities and taxes, and make new purchases. If you don’t have a sound cash position, it’ll be difficult for the business to stay solvent and prevent bankruptcy.

Cash reserves.

Importance for businesses


Having a cash flow statement is also a very important accounting compliance requirement. If you own a private limited company, your potential shareholders and investors would want to analyze the company’s cash flow situation before pitching their investment.


Your business especially needs a cash flow statement if you deal with a lot of non-cash transactions. A cash flow report is valuable in helping you and your potential stakeholders keep track of the transactions that haven’t been received in cash as yet.


This will help you protect your business relationships. You can always convince your business partners that you have plenty of cash to pay for the transactions.


Do you need help generating your company’s cash flow statements? Duggal Professional Corporation from Edmonton can help you. We are a full-service accounting firm that will help you stay on top of your financial and tax compliance requirements. We also offer business consultancy and reporting, startup planning, bookkeeping, and payroll services. Take a look at our tax and accounting services online.