A cash flow statement is a statement of a company's cash inflows and outflows during a specified period of time. It essentially provides financial information to the company's stakeholders regarding the cash activities of the business. By being able to create a cash flow statement, companies are better able to analyze their cash performance and make more informed decisions moving forward.

The benefits of preparing a cash flow statement in Excel are numerous. Below we will look at a few of the advantages that come with preparing a cash flow statement in Excel:

  • You can easily compare your business's performance over multiple time periods.
  • The format is straightforward and concise, making it easy to adjust as needed.
  • The ability to use formulas, charts, and tables makes it possible to quickly analyze data.
  • You can create budget models to better understand your company’s fiscal health.
  • You can compare the performance of different departments within the company.

Key Takeaways

  • Easily compare your business's performance over multiple time periods.
  • Format is straightforward and concise.
  • Use formulas, charts, and tables to quickly analyze data.
  • Create budget models to better understand your company's fiscal health.
  • Compare the performance of different departments within the company.

Steps for Building a Cash Flow Statement in Excel

A cash flow statement is one of the financial statements used for a business to assess the inflow and outflow of cash. It allows a business to determine how well it is managing its finances both short-term and long-term, and it is an important tool for financial planning. Building a cash flow statement allows a business to get a better understanding of their finances and plan ahead to ensure they are making the best financial decisions.

Sample input data that is needed

The first step in creating a cash flow statement in Excel is to input the data that is necessary. This typically includes data about the balances of accounts and any changes to them. These include accounts such as cash, bank accounts, receivables, payables, taxes, equity and other accounts. This data can be gathered from account statements, receipts, bank withdrawals, etc.

Formula for calculating operating activities

Once the data has been entered, it is time to start calculating the operating activities. This includes calculating profits and losses, expenses, gains and losses on investments, income and capital transactions, etc. To begin this calculation, the net income can be calculated by subtracting the total expenses from total income. Once the net income is calculated, other operating activities can then be calculated by taking into account any other income or losses.

Formula for calculating investing activities

The next step is to calculate the investing activities. This involves calculating the cash flow from the acquisition and disposal of investments, buildings and other fixed assets, as well as other investments. The calculation for this can be done by taking into account the cash received for sales of investments and subtracting the costs of any investments that were acquired. This can also include the purchase of plant and equipment, the sale of buildings and other fixed assets, and other investments.

Formula for calculating financing activities

Finally, the financing activities must be calculated. This includes the cash flow from debt, equity and other financing sources. The calculation for this can be done by calculating the cash received from loans and other forms of financing, subtracting the interest paid, subtracting the repayment of principal, and any other cash inflows and outflows. Once all of the financing activities have been accounted for, the cash flow statement can then be completed.

What to Do Once the Statement Is Built

Once the initial cash flow statement has been built in Excel, there are additional steps that can be taken to ensure that the statement is accurate and useful. It is important to not forget that the statement is merely a reflection of financial activity and should be used to make decisions accordingly.

Tips for Success with Cash Flow Statements

Having an accurate cash flow statement provides a foundation for informed business decisions. Following are tips to increase the accuracy of the cash flow statement:

  • Understand the Difference Between Operating, Investing, and Financing Activities: Each of the categories needs to be managed separately and accurately, in order to ensure accuracy of the total.
  • Verify Authenticity of Transactions: Transactions should be confirmed to ensure that balances are reported accurately.
  • Keep Records: Grand totals should match with accounting records touching each transaction.
  • Consult With Financial Professionals: Advisors or consultants can provide advice on a variety of issues that may affect the accuracy of the statement.

What to Do if the Statement Does Not Add Up

If the final cash flow statement totals do not add up after all entries have been made, there are a few steps to take to determine the reason for the discrepancy. Depending on the complexity of the accounts and the size of the discrepancy, it may be necessary to reconstruct the statement in order to find the error.

  • Identify Any Missing or Forgotten Transactions: If any transactions are not included, then the totals will not match. Make sure all credit and debit entries are accounted for.
  • Double-Check the Math: Check all amounts to make sure that the math is wholly accurate and not missing any decimal places.
  • Look Out for Different Classification of Accounts: Calculations can be off if certain accounts were classified differently in the initial entry. For example, interest received may have been included with operating activity, when it should actually be under financing.
  • Verify Totals With Accounting and Records: Go through the statement and add up each debit/credit line item in order to verify the total before reconciling the statement.

Benefits of Using a Cash Flow Statement for Forecasting

Having an accurate cash flow statement is beneficial for forecasting future needs of the business. By comparing current cash flow statements to prior ones, trends can be identified that can help with decision-making for future purchases or investments. Additionally, short-term cash flow statements can be used to assess whether there are any additional potential sources of funds that need to be taken into account. Finally, cash flow statements provide an overview of the company's ability to sustain long-term operations, which can be used in strategic planning.

Example of a Cash Flow Statement Built in Excel

Excel is a great tool for procedural financial activities, such as building cash flow statements. A sample statement built in Excel includes several columns and rows, organized as a traditional spreadsheet.

Overview of How It is Organized

The cash flow statement is typically organized into three categories: operating activities, investing activities, and financing activities. Operating activities are those that are necessary for the regular operations of the business. Investing activities refer to the purchasing of long-term assets or investments, such as real estate or stocks, as well as disposals of those assets. Financing activities are those earned from sources of funding, such as loans, dividends, or sales of equity. Each of these three categories is usually further broken down into income, expenses, cash sources (money coming in), and cash uses (money going out).

Description of the Income, Expenses, and Cash Sources/Uses

  • Income. Examples of income items can include sales revenue, interest income, exceptions, and gains on sales of investment properties.
  • Expenses. Common expenses can include cost of goods sold, sales, general and administrative expenses, operating expenses, depreciation and amortization, taxes, and any other expenses incurred.
  • Cash Sources. Cash sources can include proceeds from the sales of long-term assets, dividends received, or proceeds from the issuance of debt and equity.
  • Cash Uses. Cash uses refer to the use of cash from investing and financing activities, such as the retirement of debt or investment in assets.

Variables that Can Be Changed to Adjust the Statement

The values for any of the inputs, such as income, expenses, or cash sources/uses, can be adjusted as needed to create different results. For example, an increase in operating expenses can result in a decrease in cash, while a decrease in operating expenses can result in an increase in cash. This can help to better illustrate the impacts of changing inputs and to understand the implications of prudent financial management.

Building Cash Flow Statements in Excel

Cash flow statements are critical documents that provide a financial representation of a business’s cash inflows and outflows during a set period. This document, which is used by companies of all sizes, helps understand and streamline operations. Thankfully, Excel allows for the creation of detailed cash flow statements.

How to Prepare the Statement Automatically

The difficult task of creating cash flow statements manually can be trimmed considerably by taking advantage of budgeting and forecasting software available. While software engineers continue to introduce new applications, Excel remains an invaluable and widely used tool for businesses of all sizes to build a cash flow statement.

Features that make it faster to build the statement

Many of the features available on Excel make it possible to quickly build a cash flow statement. Some of these features include:

  • Automatic sorting of data – You can quickly sort and organize income and expenditure data by using formulas such as Excel's "AutoSort" or "Sort" feature. This way, you can swiftly sort the data by date or any other criteria.
  • Data filtering – Excel has filtering capabilities that enable users to easily identify, organize and analyze data by selecting only the necessary information for their financial report.
  • Automatic calculations of cumulative cash flow – Data is automatically calculated when inserted into cells. This is achieved with the use of formulas, such as the SUM, which totals the data in a range of cells.
  • Formatting – Excel's formatting tools make it possible to customize your cash flow statement as desired. Formatting includes adjusting row/column sizes, font size and style, fill color, borders and many other options that can help make your statement easier to read and understand.

Common Pitfalls

When it comes to building cash flow statements in Excel, there are a few common pitfalls to look out for. Preparing the statement requires careful attention to detail, and the consequences of any errors can have a serious impact on the accuracy of the final report. Here’s what you should look out for.

What to Look Out for When Preparing the Statement

It’s important that you pay close attention to the different types of Cash Flow items. For example, Operating Cash Flows should be separate from Financing Cash Flows. You should also make sure that you’ve accounted for cash inflows and outflows accurately, and that any non-cash transactions are taken into account.

You should also be sure to use up-to-date information, and double-check any calculations to make sure they are correct. Also, be sure to include a description of every transaction so that they can be easily understood in the Cash Flow statement.

How to Make Sure the Statement is Accurate

Once you’ve established the parameters for your Cash Flow statement, the best way to ensure accuracy is to double-check the numbers you enter. Make sure the numbers match up with the general ledger, and that you’ve accounted for all transactions. Additionally, you should make sure that any non-cash transactions are taken into account.

Finally, make sure to use a consistent format throughout the document. Stick to the same layout, column titles, and calculation formats so that the statement is easily readable. This will help ensure accuracy and consistency throughout the document.


Cash flow statements are essential for business owners as they give an in-depth view and insight into their income, expenses and cash reserves. Building a cash flow statement in Excel is a relatively straightforward process, requiring only basic understanding of Excel's various features and functions. Through this outline, we have taken a look at the various steps involved in creating a cash flow spreadsheet from scratch.

The first part of building a cash flow statement is to set up the documents, which includes creating labels for the top row, adding column numbers and ensuring the accuracy of the data. Next, you will be inputting actual cash flows - tracking events that resulted in cash coming in or out of the business. Accruals must also be considered which can provide an estimate of expected cash flows without actually receiving or paying out cash. Once this data has been inputted and reconciled, an income statement and balance sheet can be drawn up with the click of a few buttons.

Once both the income statement and balance sheet have been completed, they can then be used to get a comprehensive overview of the actual cash flows of a business. This includes both operating, investing, and financing activities that have occurred over the period, which can then be used to help inform management decisions.

Summary of Building Cash Flow Statements in Excel

In summary, setting up and building a cash flow statement in Excel requires basic knowledge of the application and a review of the information available. Once the labels and columns are set up, the actual cash flows, accruals and related transactions need to be captured and entered. Finally, the income statement and balance sheet can be drawn up, displaying a picture of the actual cash flows of the business and providing management with meaningful insights to inform decisions.

Last Points for Why This is Important for Business Owners

By building cash flow statements in Excel, business owners can gain a greater understanding of their cash flow patterns, operations and the sources of capital available to them. Building cash flow statements in Excel also allows business owners to create customized reports tailored to their specific needs and requirements. In addition, business owners can also easily evaluate past performance, accounts receivable and accounts payable, and track accounts receivable, cash flows and bank deposits over time.

An added benefit of creating these statements in Excel is that it allows business owners to make quick decisions based on their records and bring visibility to their finances. With the help of this financial statement, business owners can analyze the past, observe changes in trends and budget effectively for the future.

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