The cash flow analysis of Riviera Cleaners Company includes analyzing the sources and uses of the business cash. That is, determining the current operating results and changes on the balance sheet including increases or decreases in accounts receivable or accounts payable. The cash flow statement analysis does not include the noncash accounting such as amortization and depreciation. On the other hand, the profit and loss statement analysis entail determining the revenues of the company, expenses, and profit or loss. Regarding the expenses, the analysis includes noncash accounting such as depreciation.

The expenses reflected on the profit and loss statement and not in my cash flow analysis include depression. The depreciation value in the P & L is $940. Depreciation entails the systematic decrease in the value of the non-current asset.

Conversely, expenses shown on a cash flow statement and not on a P & L include owner’s draw, payment for credit card principal and payment for loan principle. Although these expenses are shown on a cash flow statement and not on the P & L, they are not included in my cash flow statement. There is a difference because, these transactions take cash out of the business; therefore, they will appear on a cash flow statement and not on a P & L statement.

Information in my balance sheet that is of interest to the bank is the company’s current assets including cash and inventory. Also, the bank will be happy with the information on the current liabilities since the company does not have current borrowing liabilities and other current liabilities. Therefore, the bank will be happy with the credit history of the company and financial position.

Information in the balance sheet can also be used by the management to determine if the company has enough working capital. If the computation of the current assets and current liabilities is positive, then the company can sustain itself (Carey & Essayyad, 2015). Also, information in the balance sheet can be used to determine the net worth of the business and if it can sustain future operations.

References

Carey, O. L., & Essayyad, M. (2015). The essentials of financial management. Piscataway, New Jersey: Research & Education Association.

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