Financial modelling terms explained

Cash Flow Statement

The cash flow statement is a financial statement that tracks the cash that enters and leaves a business during a specific period. It is one of the four basic financial statements

What is a Cash Flow Statement?

A cash flow statement is a document that shows a company's cash inflows and outflows over a specific period of time. The statement can be used to track a company's actual cash flow performance or to predict future cash flow needs. It is also used to help assess a company's liquidity, financial flexibility, and ability to repay debts. The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities.

What Do You Need to Know About a Cash Flow Statement?

A cash flow statement is a financial statement that shows how changes in a company's cash and cash equivalents relate to its net income. The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities. The cash flow statement can be used to identify a company's sources and uses of cash, as well as its liquidity position.

How Do You Read a Cash Flow Statement?

The cash flow statement is one of the most important financial statements because it shows how a company is generating and using cash. The cash flow statement has three sections: operating activities, investing activities, and financing activities.

The operating activities section shows the cash generated and used by a company's normal business operations. This section includes cash generated from sales of goods and services, cash used to pay expenses, and cash generated from or used to pay taxes.

The investing activities section shows the cash generated and used by a company's investments in long-term assets, such as property, plants, and equipment. This section includes cash generated from the sale of long-term assets, cash used to purchase long-term assets, and cash payments for dividends and interest.

The financing activities section shows the cash generated and used by a company's financing activities, such as issuing and repaying debt, and issuing and repurchasing shares of stock.

What Other Information Do You Need to Know About a Cash Flow Statement?

A cash flow statement is an important financial statement that shows a company's cash inflows and outflows over a specific period of time. This statement can help a company determine its liquidity, or how easily it can meet its obligations. To create a cash flow statement, a company must first calculate its net income. This calculation is then used to determine the company's cash flow from operating activities, investing activities, and financing activities. The cash flow statement can be used to make short-term and long-term financial decisions, such as whether to expand the business or invest in new equipment.

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