Introduction to Understanding the Statement of Cash Flow

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Learning how to read a cash flow statement helps you predict whether a company will be able to meet its debts and be profitable.

What you will learn

  • Importance of the Statement of Cash Flow
  • The Statement of Cash Flow vs. the Income Statement
  • Format of the Statement of Cash Flow
  • The Statement of Cash Flow: Operating Activities
  • The Statement of Cash Flow: Investing Activities
  • The Statement of Cash Flow: Financing Activities

What do you know?

Introduction to Understanding the Statement of Cash Flow

Just like cash into your wallet, a firm’s cash comes in and goes out. The statement of cash flow is the report that identifies how a company receives and spends its cash. All publicly traded companies are required to publish a statement of cash flow. The cash flow statement is divided into three sections so that the reader can easily identify the sources from which a firm generates its cash (cash inflow) and where it is spending its cash (cash outflow).

The statement of cash flow is a valuable source of information to the investor who wants to compare potential investments.