Summary
The Cash Flow Statement shows how cash moves into and out of a company during a reporting period. It is usually divided into operating activities, investing activities, and financing activities.
This statement helps investors understand how much cash a company actually generates and uses.
Why it matters
A company can report accounting profit while generating weak cash flow. The Cash Flow Statement helps investors assess liquidity, financial flexibility, and the ability to fund operations, repay debt, pay dividends, and invest in growth.
Cash flow is a key measure of financial health.
How to read it
Operating cash flow shows cash from the core business. Investing cash flow shows cash used for or generated from investments and long-term assets. Financing cash flow shows cash related to debt, equity, and dividends.
Investors should review cash flow together with profitability and balance sheet strength.