Cash flow statement

This article or paragraph presents the situation in Germany . Help us to describe the situation in other countries.

The cash flow statement ( KFR ), and cash flow -Rechnung called, has to make the goal of transparency regarding the cash flows of a company. The change in liquidity potential over time should be quantified and the causes of the changes identified.

General

The term “cash flow statement” is actually misleading, as the capital is usually not liquid and usually hardly moves within a year. A correct designation and also a better translation of the English term “cash flow statement” would therefore be the term “cash flow statement”. This term is used in Switzerland, but has not yet caught on in Germany.

The term “cash flow statement” is defined in many ways due to the lack of uniform or legal stipulations and, depending on the function, is based on national and international standards. Despite all contradictions, the cash flow statement should be recognized as a special additional instrument for assessing the financial situation, as it provides valuable information for the financial situation and systematically compares the origin and use of financial resources . Accordingly, the cash flow statement can also be referred to as a source and use of funds account or a cash flow statement, in which the development, origin and use of the funds are documented, as well as the payment and payment of the period under consideration is mapped in a structured manner. In simplified terms, it is the comparison of deposits and withdrawals in a billing period in order to provide information on the company's financial strength.

The so-called indirect method , in which the cash flows are presented using a reconciliation based on accounting values, or the so-called direct method (the cash flows are specified immediately, i.e. without a reconciliation) can be used to represent the cash flow.

The determination (data collection) of the payment flows can in turn take place originally , with those accounts in the bookkeeping with cash-effective business transactions being used to determine the amounts. Alternatively, in the derivatives determining the cash flows deposits and withdrawals of expense and income and from changes in assets and liabilities derived (movement calculation).

The classic profit and loss account in accordance with Section 275 of the German Commercial Code (HGB) or i. S. d. IFRS are compared with expenses (decrease in net worth) and income (increase in net worth). In order to be able to assess the solvency of a company, however, incoming and outgoing payments as well as the cash flows within the company must be analyzed. The inadequate focus on liquidity in the annual financial statements obscures the clear insight into the company's financial position. There is no guarantee that impending payment bottlenecks and thus a reason for filing for insolvency ( Section 17 , Section 18 of the Insolvency Code (InsO)) will be recognized in good time or at all.

A distinction is made between retrospective and prospective cash flow statements. These only differ with regard to the selected observation period:

• Retrospective cash flow statements are oriented towards the past and are based on existing annual financial statements. They can therefore be objectively verified, but are not used as a forecasting tool.
• Prospective cash flow statements, called financial plans, are based on budgeted profit and loss statements. They are future-oriented, are used for forecasting and planning and are only suitable for assessing future solvency.

Cash flow statement according to HGB and DRS

The cash flow statement is part of the consolidated financial statements in accordance with the HGB ( Section 297 (1) HGB). Capital market-oriented corporations that are not required to prepare consolidated financial statements must also add a cash flow statement to the annual financial statements ( Section 264 (1) sentence 2 HGB).

The German Standardization Council regularly issues standards and recommendations. In April 2014, the German Accounting Standard No. 21 ("DRS 21") was published. Companies that are obliged to prepare a cash flow statement for consolidated financial statements in accordance with the German Commercial Code must observe DRS 21. For companies that “add a cash flow statement to their annual financial statements (YES) or voluntarily prepare a cash flow statement, the application of DRS 21 is recommended”. If companies prepare their YES according to international accounting regulations (IFRS), IAS 7 and not DRS 21 is relevant. The DRS 21 replaces the previously applicable standards DRS 2, DRS 2-10 and DRS 2-20. The application of DRS 21 is mandatory for fiscal years beginning after December 31, 2014.

In accordance with the recommendations of the old "DRS 2", a cash flow statement is structured as follows (the cash flow from operating activities is shown indirectly, the other two cash flow activity areas using the direct display):

1.		Profit for the period before extraordinary items
2.	±	Depreciation / write-ups on fixed assets
3.	±	Increase / decrease in provisions
4th	±	other non-cash expenses / income
5.	±	Loss / gain on the disposal of fixed assets
6th	±	Decrease / increase in inventories, trade receivables and other assets that cannot be allocated to investing or financing activities
7th	±	Increase / decrease in trade payables and other liabilities that cannot be allocated to investing or financing activities
8th.	±	Deposits and withdrawals from extraordinary positions
9.	=	Cash flow from operating activities ( operating cash flow )
10.		Proceeds from the disposal of property, plant and equipment
11.	-	Payments for investments in property, plant and equipment
12.	+	Payments received from disposals of intangible assets
13.	-	Payments for investments in intangible assets
14th	+	Payments received from disposals of financial assets
15th	-	Payments for investments in financial assets
16.	+	Proceeds from the sale of consolidated companies and other business units
17th	-	Payments from the acquisition of consolidated companies and other business units
18th	+	Payments due to financial investments in the context of short-term financial management
19th	-	Payments due to financial investments in the context of short-term financial management
20th	=	Cash flow from investing activities ( investive cash flow )
21st		Payments from equity injections
22nd	-	Payments to company owners and minority shareholders
23.	+	Inpayments from issuing bonds and taking out (financial) loans
24.	-	Payments from the repayment of bonds and the repayment of (financial) loans
25th	=	Cash flow from financing activities ( finance cash flow )
26th		Changes in cash funds affecting payments (total of 9th, 20th and 25th)
27.	±	Changes in cash funds due to exchange rates, the scope of consolidation and valuation
28.	+	Cash funds at the beginning of the period
29	=	Cash funds at the end of the period

Cash flow statement according to IFRS

→ Main article : IAS 7

In accordance with IAS 1.10d, the IFRS financial statements contain a cash flow statement. The presentation is based on IAS 7.

Cash flow statement according to DVFA / SG

Simple and important cash flow calculation for works councils and employee representatives or employee representatives in economic committees in accordance with the recommendations of the German Association for Financial Analysis and Asset Management (DVFA) and the Schmalenbach Society (SG):

1.		Profit for the period before extraordinary items (consolidated profit for the year before profit transfer or profit after tax)
2.	±	Write- downs / write-ups on fixed assets, no write-offs on receivables (see income statement)
3.	±	Changes (differences) in long-term provisions (generally longer than 1 year) (see balance sheet)
4th	±	other non-cash expenses / income, e.g. income from the release of special items (see balance sheet)
5.	=	Cash flow according to DVFA / SG

literature

• Amen, Matthias: The cash flow statement, in: Klaus von Wysocki et al. (Hrsg.): Handbuch des Jahresabschluss (HdJ), Cologne: Verlag Dr. Otto Schmidt, Dept. IV / 3, 43rd supplement, March 2008 (104 pages) ISBN 3-504-35110-1 .
• Amen, Matthias: Creation of cash flow calculations, 2nd, supplemented edition, Munich / Vienna: R. Oldenbourg Verlag, 1998 (281 pages) ISBN 3-486-24730-1 .
• Eiselt, Andreas / Müller, Stefan: IFRS: Cash flow statement: presentation and analysis of cash flows and means of payment, Erich Schmidt Verlag, Berlin 2008 (135 pages) ISBN 978-3-503-10390-4 .
• Schmidt, Andreas: Design and analysis of the cash flow statement in the annual financial statements - According to HGB and IFRS, EUL-Verlag, Lohmar 2017 (76 pages) ISBN 978-3-8441-0502-5

Individual evidence

1. ^ Ingo Fehlberg: Cash flow statements according to the new IDW standard. September 18, 2015, accessed March 30, 2016 . 
2. ↑ Andreas Bauer: DRS 21. (PDF; 565 kB) The new standard for the cash flow statement with special attention to the BilRUG. December 17, 2015, accessed March 30, 2016 .