Please provide an apa discussion response citing the below references in the text of your response.

Where does the cash go and how does it flow?

Ana Navarro, May 28, 2024

One does not have to look far to understand cash flow. Blackman (2014) provides excellent context to cash flow statements found within everyday households. Generally, a person receives a paycheck every two weeks, cash on hand. While it is exciting to see all the cash sitting in the bank, much of it is already spoken for, so, there is less left over after bills and expenses. What is left equals net cash flow (Siciliano, 2014).

The cash flow statement is divided into three main categories: operations, investments, and financing. Investments and financing can show additional aspects of cash flow, but operations provide cash flow related to a company's business activities (TheSkeebie21, 2011). These are the day-to-day activities that affect cash flow within an organization (Siciliano, 2014). Operations include income, expenses, depreciation assets, and inventory. This section provides the cleanest view of the company's activities.

One key aspect of monitoring is if cash inflows exceed cash outflows, just like in the payday analogy (TheSkeebie21, 2011). When operational cash flow is smaller than the net income, it is an indicator that something is off. Regularly comparing these two numbers is a proactive way to keep operational costs consistent. Another important practice is maintaining an emergency cash reserve for unexpected events (TheSkeebie21, 2011). In addition to a cash reserve, forecasting cash flow 6-12 months in advance is a great practice supporting long-term planning (Siciliano, 2014). Finally, being able to spot potential red flags such as excessive debt over cash will benefit stakeholders in analyzing a company's spending habits, determining if a company is financially healthy (Rule #1 Investing, 2011).

Whether managing personal finances, running a small business, or considering an investment, gaining a clear understanding of where the cash goes and how it flows empowers you to make informed financial decisions, putting you in control of your financial destiny.

References

Blackman,A. (2014, January 20).How to read a cash flow statement. Business Envato Tuts+.https://business.tutsplus.com/tutorials/how-to-read-a-cash-flow-statement--cms-71Links to an external site.

Rule #1 Investing. (2011).How do you read a cash flow statement?YouTube.https://www.youtube.com/watch?v=X17bUV-EfIMLinks to an external site.

Siciliano,G. (2014).Finance for nonfinancial managers(2nded.). McGraw Hill Professional.

TheSkeebie21. (2011).What is cash flow?YouTube.https://www.youtube.com/watch?v=hISdzmjNO5w&feature=youtu.beLinks to an external site.