Preparing the Statement of Cash Flows Using the Balance Sheet “Squeeze” Spreadsheet

Abstract

The statement of cash flows (SCF), established pursuant to
Statement of Financial Accounting Standards No. 95 (FAS
95), is perhaps the most useful of the standard financial
statements-balance sheet (BS), income statement (IS), and
SCF-in evaluating the financial viability of a company,
particularly a small business. Unfortunately, the SCF is
probably the least understood of the three statements and the
most difficult to prepare, and is frequently not included in the
financial statement compilations issued by accountants for
many small businesses. This paper describes a spreadsheet
methodology commonly employed in private industry to
facilitate preparation of the SCF, which can be suitable for
teaching accounting and finance students at the
undergraduate level.