There’s 3 main financial statements you should be looking at once you’ve completed your books to see its health.

what the CF statement tells you

• it shows you a little more closely the inflows and outflows of the cash within your business. its what you don’t see by just looking at the balance sheet
• it shows if the business can sustain itself from its operating activities or if it has to rely on outside funding which isn't healthy because a trend like that could easily take the business itself to becoming over leveraged if you are not careful

what you should be looking for with a CF statement

• what the changes in operating cash flow are, just because you are profitable doesn't mean your core operating activities like sales and accounts payable are enough to cover your financial obligations

• negative cash flow isn't bad, it may mean for that period there was more investments made into new equipment or other companies, however if it persists for a long period of time and what is defined as long is dependent on your business whether you are a growth company, startup or long time business. You're likely a startup so past 1-3yrs of negative cash flow from operating activities is an issue

• you should also be doing a vertical analysis so this means comparing for example the cash flow from operating activities as a percentage of Net Increase (or Decrease) in Cash and Cash Equivalents, the percentage vs others tells you where the money in your business is flowing

  

notice how here you can see how much of the cash provided by operating activities is made up by net income which is good this means cash is flowing more than enough to sustain the business.

make sure you are keeping enough cash to make investments in new kit and to be paying your bills on time.