Cash Flow Statement Example
A cash flow statement shows you where your money actually goes. Not revenue on paper, not accrued expenses, but real dollars moving through your business. Below is a complete cash flow statement example for a small business, plus a 3-year cash flow projection you can use as a reference for your own planning.
Generate Your Cash Flow ProjectionsWhat is a cash flow statement?
A cash flow statement tracks every dollar that enters and leaves your business during a specific time period. Think of it as your bank account's story. Your profit and loss statement might say you made $67,200 last year, but if half your customers still owe you money, your actual cash position tells a very different story.
The statement splits cash movement into three sections. Operating activities cover cash from your core business: collecting payments, paying suppliers, covering payroll. Investing activities track cash spent on (or received from) long-term assets like equipment, vehicles, or property. Financing activities capture everything related to debt and equity: loan draws, loan repayments, owner investments, and owner draws.
Together, these three sections explain why your bank balance changed from the start of the period to the end. A profitable business can still run out of cash if it collects slowly and spends quickly. The cash flow statement is the document that catches that problem before it becomes a crisis.
Cash flow statement example for a small business
Greenleaf Landscaping is a residential landscaping company based in Austin, TX. This sample of cash flow covers their second year of operations.
Greenleaf Landscaping, Year 2 Cash Flow Statement
| Line Item | Amount |
|---|---|
| Operating Activities | |
| Net Income | $67,200 |
| Depreciation | $18,400 |
| Change in Accounts Receivable | -$12,300 |
| Change in Accounts Payable | $8,700 |
| Net Cash from Operations | $82,000 |
| Investing Activities | |
| Equipment Purchase | -$34,500 |
| Vehicle Down Payment | -$8,200 |
| Net Cash from Investing | -$42,700 |
| Financing Activities | |
| Line of Credit Draws | $15,000 |
| Loan Repayments | -$14,400 |
| Owner Draws | -$36,000 |
| Net Cash from Financing | -$35,400 |
| Summary | |
| Net Change in Cash | $3,900 |
| Beginning Cash Balance | $22,100 |
| Ending Cash Balance | $26,000 |
Cash flow projection example
A cash flow projection looks forward instead of backward. Here is a 3-year cash flow forecast example for Greenleaf Landscaping, based on their growth plans and expected expenses.
Greenleaf Landscaping, 3-Year Cash Flow Projection
| Metric | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Revenue | $248,000 | $372,000 | $510,000 |
| Cost of Services | $124,000 | $178,000 | $234,600 |
| Gross Profit | $124,000 | $194,000 | $275,400 |
| Operating Expenses | $68,200 | $89,500 | $112,800 |
| Net Cash from Operations | $55,800 | $104,500 | $162,600 |
| Capital Expenditures | -$42,700 | -$28,000 | -$35,000 |
| Free Cash Flow | $13,100 | $76,500 | $127,600 |
How to read a cash flow statement
Operating cash flow vs. net income
When operating cash flow is higher than net income, that is a good sign. It means the business collects cash efficiently. In Greenleaf's case, operating cash flow ($82,000) exceeds net income ($67,200) because depreciation is a non-cash expense that gets added back.
Negative investing cash flow is normal
Growing companies spend money on equipment and assets. Greenleaf spent $42,700 on a new mower and a vehicle down payment. That looks scary as a negative number, but it means the business is investing in its ability to take on more clients next year.
Watch the financing section
Heavy borrowing every year is a red flag. It suggests the business cannot fund itself from operations. Greenleaf drew $15,000 from a credit line but paid down $14,400 in loans, so the net borrowing is minimal. The $36,000 owner draw is the owner paying themselves, which is expected.
Ending cash balance is the bottom line
Every other number feeds into this one. Greenleaf ended the year with $26,000 in cash, up from $22,100. The business bought equipment, paid down debt, and the owner took a salary. And the cash balance still grew. That tells you the business can pay its bills next month.
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Generate Your Cash Flow ProjectionsFrequently asked questions
What is a cash flow statement?
A cash flow statement tracks every dollar moving in and out of your business over a specific period. It breaks down cash movement into three categories: operating activities (day-to-day business), investing activities (buying or selling assets), and financing activities (loans, owner draws, and equity). Unlike your profit and loss statement, it shows whether you actually have the cash to pay your bills, not just whether you earned a profit on paper.
What are the three sections of a cash flow statement?
The three sections are operating activities, investing activities, and financing activities. Operating activities cover cash generated from your core business, like collecting payments from customers and paying suppliers. Investing activities track cash spent on long-term assets such as equipment, vehicles, or property. Financing activities include money coming in from loans or investors and going out through loan repayments, owner draws, or dividend payments.
How do you create a cash flow projection?
Start with your expected revenue for each period, then subtract your projected costs of goods sold and operating expenses to estimate cash from operations. Factor in any planned equipment purchases or asset sales for the investing section, and include anticipated loan draws or repayments for financing. The key is using realistic assumptions based on your actual business data or solid market research. PlanArmory generates 5-year cash flow projections automatically as part of every business plan.
What is the difference between a cash flow statement and a profit and loss statement?
A profit and loss statement (also called an income statement) records revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands. A cash flow statement only tracks actual cash movements. You could show $50,000 in profit on your P&L while your cash balance drops because customers have not paid their invoices yet. That gap is exactly what the cash flow statement reveals.
How do you analyze a cash flow statement?
Focus on three things. First, compare operating cash flow to net income. If operating cash flow is consistently higher, the business collects cash efficiently. Second, look at the investing section to see if the company is reinvesting in growth or selling off assets to stay afloat. Third, check whether financing activities show a pattern of heavy borrowing every period, which could signal the business cannot sustain itself from operations alone. The ending cash balance ties it all together.
What does a cash flow forecast look like?
A cash flow forecast is a forward-looking version of the cash flow statement. It typically covers 1 to 5 years and projects expected cash inflows from revenue, cash outflows for expenses and capital purchases, and the resulting cash balance at the end of each period. The format mirrors a standard cash flow statement but uses estimates and assumptions rather than historical data. You can see a 3-year cash flow projection example for a landscaping business further up on this page.