Cash flow made easy
Why is cash flow important?
|Less Cost of Sales||$40|
|= Gross Profit||$60|
|= Operating Profit||$40|
|Less Non-Operating Expense||$10|
|= Net Profit||$30|
The balance sheet shows what your business is worth and is usually drawn up at the end of an accounting period. It consists of three main elements and follows the following formula:
Assets (What you own) - Liabilities (What you owe) = Equity (Your net worth)
Cash flow is determined by taking into account any changes in your inventory, accounts receiveable, accounts payable (and GST) and fixed assets.