Cash Flow Statement

A cash flow statement is a financial statement that summarizes the cash and cash equivalents entering and leaving a company. It is one of the three main financial statements, along with the income statement and balance sheet. The cash flow statement shows how much cash a company generates from its operations, how much it spends on its investments, and how much it pays out to its shareholders.

The cash flow statement is important because it provides information about a company's ability to generate cash and its financial health. A company that is generating positive cash flow is more likely to be able to pay its debts, make investments, and return money to shareholders. A company that is generating negative cash flow may be struggling to meet its financial obligations.

The cash flow statement is divided into three sections: operating cash flow, investing cash flow, and financing cash flow.

• Operating cash flow is the cash generated from a company's day-to-day operations. This includes cash from sales, cash from customers, and cash from interest and dividends.
• Investing cash flow is the cash spent on a company's investments. This includes cash spent on buying property, equipment, and other assets.
• Financing cash flow is the cash raised from or paid to creditors and shareholders. This includes cash from issuing debt, cash from issuing stock, and cash paid for dividends.

The net cash flow is the sum of the three sections. The net cash flow can be positive or negative. A positive net cash flow means that a company is generating more cash than it is spending. A negative net cash flow means that a company is spending more cash than it is generating.

The cash flow statement is an important tool for investors and analysts. It provides information about a company's financial health and its ability to generate cash.