A cash flow statement is one of the main financial reports that businesses worldwide, including in Thailand, must produce to reflect an operation’s liquidity. This statement helps investors, executives, customers, and creditors see how much cash the business has in circulation and whether it is sufficient for future operations. Learning to calculate and analyze these reports correctly is therefore important for business management and decision-making, helping plan financial liquidity and strengthening its overall credibility.
This article explains key points about the cash flow statement, including what it is, the types of money movements, ways to prepare it, and how to calculate and read it. We also detail how Stripe Invoicing can help manage your business’s cash flow and plan for financial transactions more efficiently.
What’s in this article?
- What is a cash flow statement?
- Types of cash flow
- How to prepare a cash flow statement
- How to calculate a cash flow statement
- How to read a cash flow statement
- How Stripe Invoicing can help
What is a cash flow statement?
A cash flow statement is a financial report used to evaluate the movement of funds and cash equivalents within a single accounting period (e.g., monthly, quarterly, or annually). It differs from the earnings report, which shows operational performance and often contains noncash items, such as depreciation or the amortization of intangible assets, such as copyrights or software.
The cash flow statement serves as the main information that helps investors, executives, and financial institutions clearly analyze the business’s real income-generating potential, investment attractiveness, and debt repayment ability, as a basis for planning finances and strategic decision-making.
Types of cash flow
Cash inflow tracks how money moves into and out of a company—from receiving payments and paying suppliers to taking out and repaying loans. Companies categorize these movements into three areas: cash flow from operating activities (CFO), cash flow from investing activities (CFI), and cash flow from financing activities (CFF). It can be roughly divided into income and expenses as follows:
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Types of cash flow |
Example of income |
Example of expenses |
|---|---|---|
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Operating activities: Income and expenses arising from the main business activities |
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Investment activities: Income and expenses from trading in assets long term and investment in noncurrent assets |
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Financing activities: Income and expenses related to borrowing money or raising capital |
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How to prepare a cash flow statement
In Thailand, there are two primary methods for preparing a cash flow statement: directly and indirectly.
Direct cash flow statement
The direct cash flow format records a business’s actual receipts and payments. The advantage of this method is that it provides a detailed view of cash inflows and outflows, including funds from sales of goods and services, payments to suppliers, and salaries and operating expenses. This option is suitable for cash oversight for managers who need to plan short-term liquidity based on income and expenses.
Indirect cash flow statement
The indirect format starts with net profit from the earnings report and then adjusts for noncash items. This approach is straightforward to assemble because it can reference the existing report to identify the funds on hand, such as adding back depreciation, accrued revenue, accrued liabilities, or other noncash items. This method is suitable for investors, analysts, and accountants who want to see the relationship between earnings and money movements to evaluate performance.
Cash flow statement example (direct method)
Cash flow statement (direct method) for the year ending December 31, 2024
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Cash flow from operating activities |
Cash received Cash paid Net cash provided by operating activities: ฿250,000 |
|---|---|
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Cash flow from investing activities |
Cash received Cash paid |
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Cash flow from financing activities |
Cash received Cash paid Net cash provided by financing activities: ฿50,000 |
How to calculate a cash flow statement
The cash flow statement is calculated by adding up money received and subtracting money paid for each category, then summing the results to find the net change in funds for a given accounting period (e.g., quarterly or annually).
Net cash from operating activities = Total cash received – Total cash paid
| (฿1,200,000 + ฿50,000) – (฿700,000 + ฿250,000 + ฿20,000 + ฿30,000) |
| Net cash provided by operating activities = ฿250,000 |
- Cash received from sales of goods and services = ฿1,200,000
Other cash received = ฿50,000
Total cash received = ฿1,250,000 - Cash paid to vendors and service providers = (฿700,000)
Cash paid to employees = (฿250,000)
Cash paid for interest = (฿20,000)
Cash paid for income tax = (฿30,000)
Total cash paid = (฿1,000,000)
Therefore:
฿1,250,000 Total Cash Received – ฿1,000,000 Total Cash Paid = ฿250,000 Net Cash Provided by Operating Activities
Net cash from investing activities = Total cash received – Total cash paid
| = (฿40,000 + ฿10,000) – ฿300,000 |
| Net cash used in investing activities = (฿250,000) |
- Cash received from selling equipment = ฿40,000
Cash received from long-term investment = ฿10,000
Total cash received = ฿50,000 - Cash paid for purchase of land, buildings, and equipment = (฿300,000)
Total cash paid = (฿300,000)
Therefore:
฿50,000 Total Cash Received – ฿300,000 Total Cash Paid = ฿250,000 Net Cash Used in Investing Activities
Net cash from operating activities = Total cash received – Total cash paid
| = ฿200,000 – (฿100,000 + ฿50,000) |
| Net cash used in financing activities = ฿50,000 |
- + Cash received from long-term loans = ฿200,000
Total cash received = ฿200,000 - – Cash repayment of a loan = (฿100,000)
– Cash dividends = (฿50,000)
Total cash paid = (฿150,000)
Therefore:
฿200,000 Total Cash Received – ฿150,000 Total Cash Paid = ฿50,000 Net Cash Used in Financing Activities
Summary of end-of-year cash flow statement
Year-end cash = Net cash + Beginning cash
| = (฿250,000 – ฿250,000 + ฿50,000) + ฿100,000 |
| Year-end cash = ฿150,000 |
- + Net cash from operating activities = ฿250,000
– Net cash from investing activities = (฿250,000)
+ Net cash from financing activities = ฿50,000
Total net cash = ฿50,000 - + Beginning cash = ฿100,000
Total cash from the beginning of the year = ฿100,000
Therefore:
฿50,000 Total Net Cash + ฿100,000 Total Cash From the Beginning of the Year = ฿150,000 End-of-Year Cash
How to read a cash flow statement
Reading the cash flow statement is different from just looking at net profit from the earnings report. If a company shows a surplus on its income statement but cannot manage its cash flow efficiently, it could face problems paying debts and continuing operations. A basic way to read the report is by considering the following financial information:
The ending cash balance needs to show an increase
A good overall position requires a positive cash balance at the end of the period and consistently increasing results, reflecting the company’s liquidity. If the ending funds on hand exceeds the opening figure, the organization generated more money than it spent during the same timeframe.
Cash from operating activities must always be positive
A stable enterprise must always have positive net cash flow, indicating that the core business can generate income and receive more funds than those required for payments. Suppose there is a high level of reported earnings but outflows exceed inflows from operations. In that case, it might reflect issues with debt collection, administration, inventory, or gains that do not come from actual funds.
Negative cash flow from investments is normal
A growing business that is acquiring additional assets often has outgoing funds from investing transactions, which is normal given the frequency of large cash payments. As a result, having negative cash flow from allocating capital is considered a good sign because it indicates investment for growth. However, the business also needs to set targets to ensure that, in the future, it generates more cash inflows from operations than it has contributed.
Cash from financing activities is often slightly negative
Money raised or repaid through financing can be either positive or negative, depending on the methods of raising funds and the timing of payments for each organization. This portion of cash helps indicate how much a company relies on debt. If the capital is balanced and there is no excessive debt, it often reflects a well-run operation that has sound money management and handles its liabilities efficiently.
Read the cash flow statement from long-term data
To clearly understand the cash flow statement, one must not focus only on a specific timeframe but also analyze it in the context of long-term working capital data to truly comprehend the business’s ability to generate and manage funds. Reviewing these reports from the past three to five years provides an overall picture of cash generation and manages liquidity. These historical patterns help you forecast future money movements and plan for more stable finances.
Compare with industry figures
In addition to reading and understanding the cash flow statement, entrepreneurs need to compare these figures with industry standards or averages to assess competitiveness, and gain a broader perspective on the company’s financial efficiency relative to competitors and the overall market. In doing so, differences in structure, costs, and investment characteristics need to be considered within the same industry.
Summary of the basics of a good cash flow statement
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Cash flow figures |
Liquidity |
|---|---|
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Cash balance at the end of the period |
…should always be positive and increasing |
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Cash from operating activities |
…should always be positive |
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Cash from investments |
…in the negative is normal |
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Cash from financing activities |
…is usually slightly negative (alternating positive and negative) |
How Stripe Invoicing can help
Stripe Invoicing simplifies your accounts receivable (AR) process—from invoice creation to payment collection. Whether you’re managing one-time or recurring billing, Stripe helps businesses get paid faster and streamline operations:
- Automate accounts receivable: Easily create, customize, and send professional invoices—no coding required. Stripe automatically tracks invoice status, sends payment reminders, and processes refunds, helping you stay on top of your cash flow.
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- Enhance the customer experience: Deliver a modern payment experience with support for 25+ languages, 135+ currencies, and 100+ payment methods. Invoices are easy to access and pay through a self-serve customer portal.
- Reduce back-office workload: Generate invoices in minutes and reduce time spent on collections through automatic reminders and a Stripe-hosted invoice payment page.
- Integrate with your existing systems: Stripe Invoicing integrates with popular accounting and enterprise resource planning (ERP) software, helping you keep systems in sync and reduce manual data entry.
Learn more about how Stripe can simplify your accounts receivable process, or get started today.
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