Cash flow planning

It is important to have a cash flow document because it informs the reader of the organisation’s cash position throughout the reporting period. For an organisation to be successful, it must have sufficient cash at all times and that means understanding where it is coming from and how it is being spent.

Income statement

An Income Statement is a summary of an organisation’s income and expenses over a period of time. It is vitally important because it tells its reader a story about what has happened over that period of time.

For external stakeholders, it can show an organisation’s past performance and predict how it will perform in the future (e.g. looking for a loan to cover an unexpected situation). Internally, it is very important in dictating your strategy and spending.

You can:

• Measure your health against different operating periods
• Determine the profitability of each activity and your ability to continually cover those costs
  compare line items and identify movement across different statement periods for trends