Cash Flow Statement
A financial statement that tracks how cash enters and leaves a business, categorizing movements into operating, investing, and financing activities.
Cash Flow Statement
A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down into operating, investing, and financing activities.
For instance, a software company’s cash flow statement might reveal $500,000 generated from operations, $300,000 used for investing in new equipment, and $100,000 from financing activities, resulting in a net increase of $100,000 in cash for the period.
Cash flow statements help businesses understand their liquidity position, identify cash management issues, and evaluate financial flexibility regardless of accounting method. They complement the income statement by showing actual cash impacts versus accrual-based performance.