Cash flow statement
Cash Flow Statement
A Cash Flow Statement (pronunciation: /kæʃ floʊ ˈsteɪtmənt/) is a financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.
Etymology
The term "Cash Flow Statement" is derived from the financial terminology where 'cash flow' refers to the amount of cash or cash-equivalent being transferred into and out of a business, and 'statement' refers to a formal summary of a financial activity.
Components
A Cash Flow Statement is typically divided into three sections:
- Operating Activities: This section reports cash flow from the company's core business operations, such as selling goods, providing services, or other daily activities.
- Investing Activities: This section reports cash flow from the purchase and sale of assets, such as real estate, equipment, or marketable securities.
- Financing Activities: This section reports cash flow from activities related to a company's capital structure, such as issuing stock, paying dividends, or borrowing money.
Importance
The Cash Flow Statement is important as it provides information about a company's ability to generate cash and the sources of that cash. It also provides data that helps assess and compare a company's financial performance and its ability to fund its operations, pay dividends, repay its debts, and invest in new projects.
Related Terms
- Balance Sheet: A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
- Income Statement: A financial statement that shows how much revenue a company earned over a specific time period.
- Financial Statement: A formal record of the financial activities and position of a business, person, or other entity.
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