A cash flow statement is a financial statement that has all records of the cash inflows and outflows of the firm. Cash inflows include the money obtained from current operations and profits from external investments. While cash outflows include money spent on business activities and the investments made in that particular time.
One of the most important financial statements is the cash flow statement, as it gives a clear view of the amount of cash a company generates and how it utilizes this cash to upscale its growth. It has three sections based on the source of acquisition. They are cash from:
- Operations: This is the primary source for a company to generate cash. It includes the cash flow of all operational activities that lead to revenue and expenses.
- Investments: This includes cash flow due to investments in property, plant, equipment, and securities.
- Financing: This includes cash flow between a company, its shareholders, and its creditors.