Conducting a cash flow analysis involves several steps:
Gather Financial Statements: Collect the income statement, balance sheet, and cash flow statement. Identify Cash Inflows and Outflows: List all sources of cash inflows (sales, loans, investments) and outflows (expenses, loan repayments, asset purchases). Calculate Net Cash Flow: Subtract total cash outflows from total cash inflows to determine the net cash flow. Analyze Trends: Compare cash flows over different periods to identify trends and patterns. Make Projections: Use historical data to forecast future cash flows and plan accordingly.