Different way to present the cash flow statement

When one monitors financial activities – inflows and outflows from company’s bank account, one usually analyses and presents data in table. It’s just something we are used to and basically there is nothing wrong with it. We should have enough time and carefully read through cash flow statements to clearly see what is happening with our most liquid assets. Let’s be honest – at the end, cash is the king and cash is what every business is about 😀.

However, as life is getting faster and faster we often miss the time to carefully read all reports, especially if they consist mainly from tables with lots of data. In such cases the reader needs to really focus, understand and have good analytical skills to get to some meaningful conclusions based on reports. That is why all BI (business intelligence) solutions put more and more effort into providing good and simple options to visualize our data. The reason for this lies in fact that most people are visual types and are thus able to see trends and anomalies from charts faster than from tables. Lots of companies already use different BI solutions with such options and present their business results using different charts.

Different types of charts for different types of data

Most commonly used charts in general are:

  • time related charts, showing sales or costs or profit during different time periods and
  • structure charts showing sales structure by products or markets, costs structure by cost type, inventory structures by product and so on.

There are lots of other data commonly presented in charts but we rarely see cash flow statement data presented in any type of chart. Even if we do, such charts usually are not very user friendly. You can see few examples of such charts below where it is not clear what the message of each chart is. These charts are not easy to read and therefore do not bring high added value compared to data presented in tables.

When we present cash flow or any other data in charts, we should make sure that:

  • the message we want to deliver is clear and understandable,
  • we use colours for which reader instinctively knows what they mean,
  • we give the reader some recommendation on future actions / decision.

In other words – the reader should get the message with one look at the chart and should quickly know what to do next. Let’s look at the chart below and see what our point is.

Cash flow statement presented with contribution chart

To explain this chart, we should start with grey bars, which present cash positon at certain point of time (end of each month in this case). We can see, that at the end of February 2020 cash position was 54k EUR, at the end of March it was 64k EUR and at the end of April it was 47k EUR.

Note: In the chart above the selected period is a month, but we can also show data weekly or even daily. It depends on data we have available and which we want to look at.

Further, let’s explain green and red bars in between. They present net inflow (green) or outflow (red, obviously 😀) from different types of business activities.

  • Cash flow from operating activities is one generated by company’s core business operations (receivables collection, wages and payables payments).
  • Cash flow from investing activities is the one generated from buying or selling equipment, assets or financial investments (for example shares in other companies).
  • Cash flow from financing is mainly generated from debt, loans or capital changes.

Chart shown above was created at the beginning of May 2020, when the last actual date was end of April 2020. Left part of chart is presenting past actual data while right side of chart is reserved for presenting forecasted cash flow for next three months. Therefore, forecast bars are striped while bars presenting actual data on the left are coloured fully – so you can immediately see what is actual and what forecasted data. On the very right side of the chart, you can also see red arrow pointing down and two numeric data. These are showing the difference from last actual cash position to last forecasted cash position. The difference is minus 15k EUR which means 32%. It is quite a lot and cash positon in amount 32k EUR is not enough for this company to avoid liquidity issues. Therefore, you can also see red caution alert above the grey bar.

General rule for services companies is that cash position in any point of time should not be less than the amount of three months’ costs.