understand the cash flow statement
A Cash Flow Statement is one of the key financial statements used by businesses, investors, and analysts to evaluate the financial health and performance of a company. It provides a detailed overview of how cash is flowing in and out of a business over a specific period, usually a fiscal quarter or year. The primary purpose of the cash flow statement is to give stakeholders a clear picture of the company’s ability to generate cash, manage liquidity, and meet its financial obligations. It also highlights the cash impact of investing and financing activities. Importance of Cash Flow Statement While the Income Statement (or Profit and Loss Statement) reflects a company’s revenues and expenses, and the Balance Sheet shows a company’s assets, liabilities, and equity at a specific point in time, the Cash Flow Statement focuses on the actual cash movement within the business. It bridges the gap between accrual accounting (used in income statements and balance sheets) and actual cash trans...