Accounting / July 19, 2018 / Khloe Santiago
Depreciation expense reduces profit but does not impact cash flow. Hence, it is added back. Similarly, if the starting point profit is above interest and tax in the income statement, then interest and tax cash flows will need to be deducted if they are to be treated as operating cash flows.
An integral part of the loan application process is furnishing information that shows your business is a good credit risk. The standard financial statement packet includes four main reports: the income statement, the balance sheet, the statement of cash flow, and the statement of shareholder’s equity, if you have shareholders.
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