Cash Flow Report

Written by Patricia Tunstall
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The cash flow report that is required by the Securities and Exchange Commission (SEC) must be filed annually and is available to the public on the SEC's database, Electronic Data Gathering, Analysis, and Retrieval (EDGAR). Shareholders or other interested parties have easy access to online financial reporting of publicly held corporations, whose assets and liabilities are spelled out in detail. The cash flow section is part of the financial statement that also consists of two other sections, the income statement and the balance sheet.

Generally accepted accounting principles (GAAP) govern this federally-mandated reporting. These rules enable financial advisors and others to share a common understanding of terms, notations, and formats. "Transparency" should be the basis of all financial reporting, following the lead of a longstanding principle of accounting, that things should not be made to seem other than what they are.

More Frequent Reports

This complex financial statement is for public consumption to satisfy the demand for accurate financial information about the condition of a company. Less elaborate internal reports are prepared by the accounting department as often as managers need them. These may be as detailed or as concise as the situation requires.

If, for example, the company finds it has less cash than it anticipated in the budget, a tracking audit might discover the reasons in a cash flow report. Perhaps inventory has reached untenable levels, or accounts receivable are not being collected. If sales are very strong, it is conceivable that a commensurate investment in inventory has only temporarily depleted cash reserves.


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