What is Cash Flow Statement?
Financial Statements
Explained Simply
The cash flow statement answers a critical question: where did the cash come from and where did it go? Operating activities include cash from sales, payments to suppliers, and salaries. Investing activities include buying or selling equipment and investments. Financing activities include loans, share issues, and dividends. A business can be profitable on paper but fail due to poor cash flow — this statement reveals that risk.
Related Terms
- Income StatementAn income statement (also called a profit and loss statement) is a financial report that shows a business's revenues, expenses, and resulting profit or loss over a specific period.
- Balance SheetA balance sheet is a financial statement that shows a business's assets, liabilities, and equity at a specific point in time, following the equation: Assets = Liabilities + Equity.