Example of a Retail Store Cash Flow Statement

Cash is critical to the success of any retail store. Without it, a retailer does not have the funds to purchase more inventory, hire workers or pay the rent and overhead on the store. Retailers use the cash flow statement to track and monitor the inflows and outflows of their business’s cash. The cash flow statement helps the store owner or general manager make decisions about credit card and check policies, inventory purchasing and customer offers.

The cash flow statement documents the flow of cash into a retail enterprise to fund investments and operations. It also shows the flow of cash out of the enterprise to pay for investments, operations and financing activities, the three sections on a cash flow statement. The cash flows reflected on the cash flow statement, also referred to as a statement of cash flows, link the income statement to the balance sheet, allowing the owner or general manager to see how the balance sheet and income statement activities impact cash.

With retail stores, inventory purchases have a significant impact on cash flow. Retailers use cash to buy inventory or generate cash from selling inventory. Cash-related adjustments to inventory, accounts receivables and credit card receivables all appear in the operating section of a retail store's cash flow statement. However, retailer credit card receipts that convert to cash within one to two days require no adjustments in this section because those transactions are treated as cash sales. Depreciation of in-store fixtures, furniture and computer-related hardware also show in the operating section. Statements also reflect increases or decreases in accounts payable and any adjustments due to bad debt expenses.

For a retailer, most of the investing section cash inflows and outflows relate to acquiring and disposing of store fixtures and equipment. If a retailer opens a new store, the owner records any monies the company spent on fitting out the interior of the new store in this section. When a retailer closes or renovates an old store, any cash generated by the sale or lost by the disposal of those old assets gets recorded here.

Retailers may use inventory loans to purchase inventory. Alternatively, they may use lines of credit to provide working capital for the business, including money to purchase inventory. Any lump sum new financing that comes in gets recorded in the financing section as a cash inflow. The financing section also reflects any cash outflows of principal repayments the retailer makes to its bank or commercial lender. In addition, any loans or capital infusions the owner makes to the business appear as cash inflows, while any distributions or loans from the retailer to the owner appear as cash outflows.