What is the Statement of Cash Flows?

The Cash Flow Statement measures how well a company manages its Cash Positions, meaning how well the company generates cash to pay its debts obligations and fund its operating expenses.

The main components of the Cash Flow statements are Cash from Operating Activities, Cash from Investing Activities, and Cash from Financing Activities

• The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that reports the cash generated and spent during a specific period of time (i.e., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business.

Three Sections of the Statement of Cash Flows:

1. Operating Activities: The principal revenue-generating activities of an organization and other activities that are not investing or financing; any cash flows from current assets and current liabilities
2. Investing Activities: Any cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents
3. Financing Activities: Any cash flows that result in changes in the size and composition of the contributed equity capital or borrowings of the entity (i.e., bonds, stock, dividends)