Statement of cash flows

A statement of cash flows, also known as a financial statement, is a financial statement that provides information about a company's cash inflows and outflows over a specific period of time. Changes in cash and cash equivalents are more important than changes in other financial assets and liabilities.

The statement of cash flows is divided into three main parts:

1. Operations Operating:

This section reports the cash flows generated or used by the core operating activities, such as the activities of generating revenue, purchasing inventory, paying for supplies, and paying wages. Cash flows from a company's day-to-day business operations.

2. Investment activities:

This section details the cash flows related to the acquisition or disposal of long-term assets and liabilities. It includes cash flows from buying and selling property, plant and equipment, buying and selling, and lending or collecting loans.

3. Financing Activities:

This section presents cash flows from energy-related activities, such as obtaining or repaying loans, issuing or repurchasing stock, and paying dividends. It shows how a company raises capital and distributes it to investors or creditors.

Each part of the Cash Flow statement provides a net cash flow figure that represents the difference between cash inflows and outflows for that particular activity. At the end of the statement, the net cash flow from all three sections is used to calculate the total change in cash and cash balance over time. A cash flow statement is an essential financial statement as it helps users, including investors, analysts, and creditors, understand a company's ability to generate cash, its cash flow, and its ability to meet its financial obligations. It complements the income statement and balance sheet, while providing a broader view of the financial performance and cash position of the company.