Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game by Walker Deibel

Author:Walker Deibel
Language: eng
Format: epub, pdf
ISBN: 978-1-5445-0114-7
Publisher: Pivotal LLC
Published: 2020-10-27T00:00:00+00:00

Cash Flow Statement

The third major financial statement is the statement of cash flow. This statement reports the cash at the beginning of a period, the cash at the end of a period, and the cash in and cash out that impacted the difference. It merges operating results that you would find on the income statement with the changes in the balance sheet in one place.

Remember how the income statement is likely reported on an accrual basis? This means the income reported on the income statement is not the same as the cash position. The cash flow statement is a snapshot into the cash flow management of the firm, reflecting the overall liquidity, understanding where the cash in the company is going, and helping to assess the short-term viability of a company (i.e. can it pay its bills).

Cash flow statements are sometimes provided in an OM, typically on larger-sized deals, but it’s not common. You’ll typically see this during due diligence. The purpose of the cash flow statement is for a potential buyer to understand the working capital demands of the business, and to make sure the company is producing enough cash to pay its expenses.

Adding additional working capital funds to a bank loan for an acquisition is commonplace. If you are utilizing the SBA, the working capital can be acquired with a minimum of 10 percent down, which can be a great way to apply inexpensive financing.

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