Statement of Cash Flows

Statement of Cash Flows

A financial statement that categorizes cash inflows and outflows into operating, investing, and financing activities, showing how a company generates and uses cash during a specific period.

For example, a growing tech company’s statement might show negative operating cash flow as it invests heavily in development, positive investing cash flow from selling older equipment, and positive financing cash flow from a recent funding round, explaining why its cash position changed despite reporting profits.

The statement of cash flows serves as a bridge between the income statement and balance sheet, explaining how profit translates to cash and how balance sheet changes affect cash position. It helps predict future cash needs and evaluate financial flexibility beyond profitability metrics.