I keep seeing the term cash flow statement in financial reports, but I’m not entirely clear on what it shows. Can someone explain what a cash flow statement is, what information it provides, and why it’s crucial for businesses to track it?
A cash flow statement tracks a company's cash inflows and outflows over time, categorized into operating, investing, and financing activities. It shows liquidity and financial health. Essential for budgeting and forecasting.
A cash flow statement is a financial report that shows how cash moves in and out of a business during a specific period. It tracks a company’s liquidity and ability to meet obligations. It is divided into three main sections:
Operating Activities – Cash from core business operations.
Investing Activities – Cash spent or earned from assets and investments.
Financing Activities – Cash from loans, equity, or dividends.
