If your cash flow statement shows a large unexplained net negative cash flow, you need to do some sleuthing to figure out why.

1. First, look carefully at the monthly cash flow statement to determine which month is causing the “problem.”
2. Next, look and see if the negative cash flow emanates from operations (the top third of the cash flow statement), investments (the center third), or financing (the bottom third).
3. If the negative cash emanates from operations, then it is probably caused by a sudden decrease in revenue or sudden increase in expense.
4. If the negative cash emanates from investments, then you have made a large purchase of fixed assets during the subject month (thus accounting for the negative cash).
5. If the negative cash emanates from financing, then two possibilities exist: (i) you repurchased stock (not an option in the current version of Offtoa), or (ii) you took out a loan previously and it matures in this month (the outflow of cash represents the payoff of the balance of the loan that was not sufficiently paid with the monthly payments. You can track the principal of your loan by looking at the monthly balance sheet from the time you opened the loan until this month; you’ll see how the principal changes over time, and then goes to zero when you pay it off at maturity).

Related Questions:

How can I see my cash flow statement?