Cash flow statement equally important like profit & loss statement: Dr Ramudu

 

 

“Business, industry, trade, manufacturing and service sectors deal with cash in various forms. Profit and Loss is calculated based on these transactions. While doing so it is equally important to check cash flow statement. If you can bring harmony in these three things then you can gain success in all your business ventures,” said Dr Janaki Ramudu, Dean Academics, IMT Nagpur. Dr Ramudu was speaking on the topic ‘Cash Flow Analysis in SMEs’ at Vidarbha Management Association’s weekly session organised at Chitnavis Centre. Starting any business or industry is like giving birth to a child, said Dr Ramudu no businessman wants his child to be in trouble. “While expanding the scope of the business, its capabilities, opportunities and weaknesses should also be identified,” he advised.

 

The cash received from the business comes in different forms. In business management parlance, these are called core and non-core cash flows. For example, if you get Rs 100 in cash in business, 30 percent of that cash flow usually comes from core operations. The remaining 70 percent of cash comes from investments like bonds, shares, fixed deposits, inter-corporate investments. Often this investment has to be liquidated to meet the cash shortage. So, there is a risk of loss.

 

Thus, while checking the profit and loss statement of turnover, the statement of cash flow should also be checked. These critical components of the business should be identified. If loss-profit and cash flow analysis are reconciled, then definitely the business can be expanded with minimum losses. At the beginning of the session, under the LIG Tip (Gyan Session), Hemant Zunjurkar gave tips to the professionals on how to increase their business by using the latest updates in WhatsApp. Vidarbha Management Association is a Nagpur-based organisation which meets every Sunday at 10:30 am.