Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsStatement of Cash FlowsThe statement of cash fl ows is a summary of moneycoming into, and going out of, the business over aspecifi c period. It is also prepared at regular intervals(usually monthly and at fi nancial year-end) to show thesources and utilisation of cash for a given period.The cash fl ows (in and out) are summarised on thestatement into three categories: operating activities,investing activities and fi nancing activities.HINTStatement of cashfl ows only showsthe historical dataand differs from acash fl ow forecastOperating activities: These are the day-to-day activities that arise from theselling of goods and services and usually include:• Receipts from income;• Payments for expenses and employees;• Payments received from customers (receivables);• Payments made to suppliers (payables); and• Inventory movements.Investing activities: These are the investments in items that will support orpromote the future activities of the business. They are the purchase and sale offi xed assets, investments or other assets and can include items such as:• Payment for purchase of property, plant and equipment;• Proceeds from the sale of the property, plant and equipment;• Payment for new investments, such as shares or fi xed deposits; and• Proceeds from the sale of investments.Financing activities: These are the methods by which a business fi nances itsoperations through borrowings from external stakeholders and equity injections,the repayment of debt or equity, and the payment of dividends. Following areexamples of the types of cash fl ow included in fi nancing activities:• Proceeds from the additional injection of funds into the business from the owners;• Money received from borrowings;• Repayment of borrowings; and• Payment of drawings (payments taken by the owners).19chapter 1 01-21 Eng.indd 198/15/11 5:01:25 PM