finance-cashflow

> **Templates and analytical tools only - not personalized financial, tax, accounting, or legal advice.** The **indirect method assumes accrual basis**. Cash-basis filers without AR/AP/deferred-revenue movements should use the direct-method template below. Review with a CPA before sharing externally.

# Finance - Cash Flow Statement

Generate a cash flow statement from net income and working capital changes, organized by operating, investing, and financing activities.

## Required first prompt - basis of accounting

Ask before generating:

> **Basis of accounting**: `cash` / `accrual` / `modified cash` - REQUIRED.
>
> - **Accrual** → use the **indirect method** (default below). Net income reconciled to operating cash flow via working-capital deltas.
> - **Cash basis** → use the **direct method** (template at end of this skill). There is no AR/AP/deferred-revenue to reconcile; net income already equals cash from operations from a tax-book perspective. Indirect method on cash-basis books produces nonsense.
> - **Modified cash** → either, depending on which items are accrued; flag each accrued category and reconcile.

The cash-flow header MUST display `basis_of_accounting: <selected>` and `method: indirect | direct`.

## When to use

- Monthly or quarterly cash flow reporting
- Understanding the difference between profit and cash (a business can be profitable but cash-poor)
- Preparing financials for a lender or investor
- Identifying where cash is being consumed or generated

## Inputs

- **Period**: month (YYYY-MM), quarter (YYYY-Qn), or year (YYYY)
- **Net income** for the period
- **Non-cash items**: depreciation and amortization, stock-based compensation (if any)
- **Working capital changes** (increases/decreases vs prior period):
  - Accounts receivable
  - Inventory (if applicable)
  - Prepaid expenses
  - Accounts payable
  - Accrued liabilities
  - Deferred revenue
- **Investing activities**: equipment purchases, asset sales (if any)
- **Financing activities**: loan proceeds or repayments, owner draws/distributions, equity injections

## Output format (indirect method)

```
CASH FLOW STATEMENT - [Period]
(Indirect Method)
──────────────────────────────────────────────────────────────
OPERATING ACTIVITIES
Net income (loss)                                    $XX,XXX

Adjustments for non-cash items:
  Depreciation and amortization                      $X,XXX
  Other non-cash items                               $X,XXX

Changes in working capital:
  (Increase) / decrease in accounts receivable      ($X,XXX)
  (Increase) / decrease in inventory                ($X,XXX)
  (Increase) / decrease in prepaid expenses         ($X,XXX)
  Increase / (decrease) in accounts payable          $X,XXX
  Increase / (decrease) in accrued liabilities       $X,XXX
  Increase / (decrease) in deferred revenue          $X,XXX
                                                    --------
Net Cash from Operating Activities                   $XX,XXX

INVESTING ACTIVITIES
  Purchase of equipment / assets                    ($X,XXX)
  Proceeds from asset sales                          $X,XXX
                                                    --------
Net Cash from Investing Activities                  ($X,XXX)

FINANCING ACTIVITIES
  Loan proceeds                                      $X,XXX
  Loan repayments                                   ($X,XXX)
  Owner draws / distributions                       ($X,XXX)
  Equity injections                                  $X,XXX
                                                    --------
Net Cash from Financing Activities                  ($X,XXX)

──────────────────────────────────────────────────────────────
NET CHANGE IN CASH                                   $XX,XXX
Cash at beginning of period                          $XX,XXX
Cash at end of period                                $XX,XXX
──────────────────────────────────────────────────────────────
```

## Direct-method template (cash-basis filers)

For users on cash basis (no AR / AP / deferred revenue movements to reconcile), use:

```
CASH FLOW STATEMENT - [Period]                            Jurisdiction: [SELECTED]
basis_of_accounting: cash | method: direct
──────────────────────────────────────────────────────────────
OPERATING ACTIVITIES (cash receipts / payments)
  Cash received from customers                       $XX,XXX
  Cash received - other (interest, refunds)          $X,XXX
  Cash paid to suppliers / vendors                  ($XX,XXX)
  Cash paid for wages / contractors                 ($XX,XXX)
  Cash paid for rent / facilities                    ($X,XXX)
  Cash paid for insurance / software / utilities     ($X,XXX)
  Cash paid for taxes                                ($X,XXX)
  Cash paid - other operating                        ($X,XXX)
                                                    --------
Net Cash from Operating Activities                   $XX,XXX

INVESTING ACTIVITIES
  Purchase of equipment / assets                    ($X,XXX)
  Proceeds from asset sales                          $X,XXX
                                                    --------
Net Cash from Investing Activities                  ($X,XXX)

FINANCING ACTIVITIES
  Loan proceeds                                      $X,XXX
  Loan repayments                                   ($X,XXX)
  Owner draws / distributions                       ($X,XXX)
  Equity injections                                  $X,XXX
                                                    --------
Net Cash from Financing Activities                  ($X,XXX)

──────────────────────────────────────────────────────────────
NET CHANGE IN CASH                                   $XX,XXX
Cash at beginning of period                          $XX,XXX
Cash at end of period                                $XX,XXX
──────────────────────────────────────────────────────────────
```

## Key cash flow metrics

```
Free Cash Flow              = Operating Cash Flow - Capital Expenditur