How to Do a Cash Flow Analysis

“Cash is king” is a saying that can be especially relevant to small businesses. In fact, a recent study cited on business mentorship site SCORE found that 82% of small businesses fail because of a lack of adequate cash or cash flow mismanagement. More info cash handling challenges . This is why it’s essential for sole proprietors and small businesses to conduct a cash flow analysis. This is an examination of when and why you have cash inflows to your business and cash outflows from your business, as well as the amounts involved. The Importance of Cash Flow Analysis A company's cash flow at any point in time is the difference between its cash available at the beginning of a quarter or a year and at the end of that accounting period. Cash inflows include: Payments to your credit accounts or accounts receivable Loan proceeds Receipts from the sales of goods and services Investment income Sale of assets F...