Learning how to create and read a cash flow statement, as well as understanding important cash flow ratios, can help you make better business decisions.

The cash flow statement monitors the flow of cash over a period of time (a year, a quarter, a month) and shows you how much cash you have on hand at the moment.

Let’s examine how to create a “three-statement projection model” for a company by estimating its cash flow, cash and debt balances over the years.