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Business Plan Cash-Flow Statement: Total Funds Out

This section of your business cash-flow statement shows where the money went. You may notice a number of entries that don’t appear as expenses on your income statement — such as buildings and equipment, long-term debt reduction, and distributions to owners.

The reason is because these cash outlays don’t result directly from the cost of doing business, and therefore they aren’t listed on the income statement, though they’re tracked on the cash-flow statement.

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  • Cost of goods acquired: This line item includes all the products and materials that you paid for during the cash-flow statement period. It doesn’t matter whether you sold the goods you acquired or whether they went into your inventory; if you paid to acquire them during this statement period, they show up here.

    $461,000 was expended for cost of goods acquired — a figure that matches up with the $448,000 entry for cost of goods sold shown on the company’s income statement plus a balance sheet increase in company inventories of $13,000.

  • Sales, general, and administration: This entry covers payments you made for so-called overhead expenses, including everything from paper clips to payroll. When the money actually leaves your hands, you enter those expenses here. Sales, general, and administration expenses took up $127,000, including $126,000 shown on the income statement and a pay down of $1,000 in current liabilities, shown on the balance sheet.

  • Interest expense: This entry reflects interest you paid out during the cash-flow statement period, whether for short-term or long-term loans that your company has taken to finance anything from inventory purchases to buildings and equipment. The company paid out $24,000 in interest expense.

  • Taxes: This line item reflects tax payments you made during the cash-flow statement period. The company paid $22,000 in taxes.

  • Buildings and equipment: Big-ticket items that your business purchased show up as assets on your balance sheet and in the form of depreciation on your income statement. At the time that you actually make the purchase, the amount of your purchase payment shows up here on your cash-flow statement. The gift shop owners also spent $5,000 on equipment.

  • Long-term debt reduction: This entry includes the cash you paid to reduce any of your business debts. They spent $4,000 on long-term debt reduction, which you’ll see reflected as an increase in equipment assets and a decrease in long-term liabilities on the balance sheet

  • Distributions to owners: If your company makes a profit and your balance sheet is strong, you’re in a position to give some financial rewards back to the owners of the business. If you do, enter distributions or dividend payments in this area of the cash-flow statement. The company distributed $85,000 back to the owners of the gift shop over the year, bringing the total funds out to $728,000.

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