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Cash Flow Statement What is Cash flow statement? The cash flow statement is an important planning tool in the hands of management. A cash flow statement is useful for short-term planning. A simple definition of a cash flow statement is a statement which discloses the changes in cash position between the two periods. For example, a balance sheet shows the balance of cash as on 31.12.2015 at $20,000, while the cash balance as per its latest balance sheet as on 31.12.2016 was $30,000. Thus, there has been an inflow of $10,000 during a year’s period. Along with changes in the cash position, the cash flow statement also outlines the reasons for such inflows or outflows of cash which in turn helps to analyze the functioning of a business. In order to meet its various obligations in the near future, a business venture needs adequate cash. The past analysis of the diverse sources and applications of cash will enable the management to make reliable cash flow project...

The venture capital financing means financing of new venture promoted by qualified entrepreneurs who lack experience and funds to materialize to their ideas. Under venture capital financing venture capitalist make the investment through purchase of the equity or debt securities from inexperienced entrepreneurs who undertake highly risky ventures with high potential for success. Some of the features of Venture Capital Financing are:- It is basically an equity finance in new companies. It can be viewed as a long-term investment in growth-oriented small/medium firms. Apart from providing funds, the investor also provides support in form of sales strategy, business networking, and management expertise, enabling the growth of the entrepreneur. venture capital financing Some common methods of venture capital financing are as follows: Equity financing The venture capital undertakings normally require funds for a long term. However, they may not be able to pr...

The terms ‘liquidity’ and ‘short-term solvency’ are interlinked. It means the ability of the business to pay its short-term Obligations. Failure to pay-off short-term obligation affects its credibility as well as its credit rating. Continuous default on the part of the business leads to business bankruptcy. Ultimately such business bankruptcy may lead to its sickness and dissolution. Short-term lenders and creditors of a business are very much concerned to know its state of liquidity because of their financial stake. Usually, two ratios are used to put emphasis on the business ‘liquidity’. These are current ratio and quick ratio. Other ratios include cash ratio, interval measure ratio, and net-working capital ratio. Firm's Liquidity Current Ratio The Current Ratio reflects the financial strength. A simple measure that estimates whether the business can pay debts due within one year from assets that it expects to turn into cash within that year. A ratio ...

What is Ratio Analysis? An analysis of the mathematical relationship between two individual figures or group of figures logically linked with each other and picked from financial statements of the concern is known as ratio analysis. The objective for financial ratios is that all stakeholders (owners, investors, lenders, employees etc.) can draw conclusions about the Performance (past, present, and future) Strengths & weaknesses of a firm And can take decisions in relation to the firm.  Ratio Analysis The ratio analysis basically puts light on the fact that a single figure data by itself may not reflect any meaningful information but when expressed as a comparative to some other figure, it may definitely provide some significant information. Ratio analysis is not just comparing different numbers from the balance sheet, income statement, and cash flow statement. It is comparing the number of previous years, other companies, the industry, or even the e...