C. Statement of Cash Flows
The statement of cash flows is a third key financial statement issued by public companies. It shows all cash inflows and cash outflows that a company experiences during a given accounting period.
The cash inflows include cash from ongoing operations and external investment sources. The cash outflows include cash paid for business expenses along with investment activities.
The cash flow statement is broken down into three sections: cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.
Because public companies use the accrual method of accounting, the income statement may not accurately reflect a company's cash position. The accrual method of accounting requires companies to record revenue when earned, not when cash is paid for a product or service. That means a company could be increasing earnings, while at the same time its cash balance is declining. (For more, see What is a Cash Flow Statement?)
D. Pro Forma Statements
Pro forma statements contain figures illustrating "what if" scenarios to highlight current or projected figures. They are used to reflect a proposed merger or acquisition or emphasize certain figures when a company issues an earnings announcement to the public.
Pro forma statements may not comply with generally accepted accounting principles (GAAP) and should be analyzed with caution by investors. (For more, see Understanding Pro Forma Earnings.)
Cash Flow Management
InvestingTune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
InvestingCash flow from operating activities is a section of the Statement of Cash Flows that is included in a company’s financial statements after the balance sheet and income statements.
InvestingThe metrics for the Statement of Cash Flows is best viewed over time.
InvestingA cash flow statement records the amounts of cash and cash equivalents entering and leaving a company.
InvestingPressure to be the best can sometimes push corporations to cheat. Learn how they do it and how to spot it.
InvestingA firm’s cash flow statement measures the sources and uses of its cash. The income statement shows how it is financially performing.
InvestingCash flow statements reveal how a company spends its money and where that money comes from.
InvestingCash flow from financing activities is typically the third and final section of the statement of cash flows. It shows changes to cash resulting from activities such as issuing stocks and bonds ...
InvestingA company's ability to consistently generate positive cash flows from its daily business operations is highly valued by investors. Operating cash flow can uncover a company's true profitability ...