Analysis Intermediate: Understanding the Statement of Cash Flow

Introduction to Understanding the Statement of Cash Flow 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 Summary of Understanding the Statement of Cash Flow

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

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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.