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Did you know that Apple has USD 94 Bn Cash with itself? That is more than the GDP of 66% of the countries of the world. Yes, you heard it right! I am not speaking about 66% of companies – I am speaking about 66% of the COUNTRIES! That was slightly off track! Today we start building the most important financial statement – The Cash flow statement!


What is The Cash flow Statement

I always say that Cash Flow Statement is the ONLY true statement in all the financial statements. It speaks about the real cash. The rest (Profit and Loss Statement of Facebook and Balance Sheet of Facebook) are accounting statements and I think they are just views! Cash flow statement speaks about how much cash flowed in and how much flowed out. REAL CASH!

How to Create Cash Flow Statement

There are 2 methods of creating the cash flow statement

  • Direct
  • Indirect

Direct is possible only if you have all the accounting entries with you (how much the company purchased, what out of it was cash, what was on credit etc.). Unfortunately, we don’t have that luxury. We just have the historical broad numbers with us! So we would be creating the Cash Flow Statement of Facebook through the indirect method

Cash Flow Template

My experience of modeling says that – Creating the Cash Flow Statement is a simple exercise for those who know but is tricky for those who don’t (This statement is like the golden rule of Investing (BUY LOW SELL HIGH!)

I am giving you the template of an empty cash flow statement. Why don’t you try to create it on your own?

We would be releasing the tutorials on the process to create the cash flow statement and I would keep guiding you on the process. So stay tuned!