Cash Flow

You may have heard the statement that “cash is king.” Any savvy investor would agree! A cash flow statement provides data on the cash flowing in and out of a company. Cash flow statements are often regarded as one of the most telling financial statements because it identifies how cash is being generated and used within a certain time period and is used as a basis of future cash flows.

The cash flow statement is reported in three categories, listed below:

Cash and Cash Equivalents, Beginning of the Year

Cash and cash equivalents, beginning of the year: This number includes cash that the company currently holds or can be liquidated immediately into cash. This number is the same amount of cash that the company held at the end of the previous fiscal year.

Cash from Operating Activities

This entire section and its subcomponents are dedicated to showing us how cash is generated by the company through its normal operations throughout the year. This is the primary source of cash and can measure the health of a company.

Cash from Investing Activities

This section describes the cash earned through the sale of income generating assets and spent on the purchase of the same type of products.

Cash from Financing

This section exhibits changes to cash through the sale and purchase of equity and debt and paying out dividends.


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