Cash Flow Statement

657 Words3 Pages
Cash Flow Statement:
A cash flow statement is a financial report with information on the sources of a firm's cash and how it was spent within a given period of time. In contrast to other financial reports, a cash flow statement does not present information on non-cash items like depreciation. As a result, the cash flow statement is beneficial in analyzing the temporary feasibility of a company, especially its capability to pay bills. Many analysts recommend entrepreneurs to study a cash flow statement quarterly because of its importance for small and large businesses.
Since a cash flow statement classifies cash receipts and payments based on operations, investments, and financing activities, it's categorized into these three functional sections within the business. Therefore, the major parts of the cash flow statement are cash-related operations, investments, financing, and net increase or decrease in cash. While cash from operations is cash generated from a firm's daily operations, the investing cash is generated from assets' investments. On the other hand, financing cash is paid or received from the issued or borrowed funds whereas net increase or decrease in cash is from annual rise or reduction in cash. It's important to note that regardless of the slight differences in cash flow statements, they all present financial information in all the four categories ("Cash Flow Statement", n.d.).
One of the major advantages of a cash flow statement is that it provides
Get Access