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
Image for Format of the Statement of Cash Flow

Format of the Statement of Cash Flow

(4 of 8)

Format of the Statement of Cash Flow

Below you will see an example of a typical statement of cash flow. You can see how it is broken down into three separate sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. The net increase (decrease) in cash is the sum of the three sections.

The Statement of Cash Flow

Notice that in this example, the firm generates its cash from its operating activities, which are used to fund its investing and financing activities. The firm’s cash balance decreased by $5 million.