Cash Flow Statement

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DEFINITION of 'Cash Flow Statement'

One of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter.

INVESTOPEDIA EXPLAINS 'Cash Flow Statement'

Because public companies tend to use accrual accounting, the income statements they release each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, this contract would be recognized as revenue (and therefore income), but the company may not yet actually receive the cash from the contract until a later date. While the company may be earning a profit in the eyes of accountants (and paying income taxes on it), the company may, during the quarter, actually end up with less cash than when it started the quarter. Even profitable companies can fail to adequately manage their cash flow, which is why the cash flow statement is important: it helps investors see if a company is having trouble with cash.

To learn more about the cash flow statement, check out How do changes in working capital affect a company's cash flow?

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  6. What is the purpose of drawing up a cash flow statement?

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  7. What sorts of factors decrease cash flow from operating activities?

    The operations section of the cash flow statement reconciles net income and cash flows by adding back noncash expenses and ... Read Full Answer >>
  8. What sorts of factors increase cash flow from operating activities?

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  9. What is the difference between a balance sheet and a cash flow statement?

    A balance sheet, or statement of financial position, is a summary of the financial balances of a company, while a cash flow ... Read Full Answer >>
  10. What are analysts looking for when they use free cash flow to equity (FCFE)?

    Analysts use free cash flow to equity (FCFE) to determine whether a company has enough cash available to pay its shareholders ... Read Full Answer >>
  11. What are some examples of cash flow from operating activities?

    Cash flows from operating activities is a section of the cash flow statement that explains the sources and uses of cash from ... Read Full Answer >>
  12. What is the difference between cash flow and fund flow?

    In financial accounting, "cash flow" refers to the statement of cash flows, a required report under generally accepted accounting ... Read Full Answer >>
  13. What is the difference between a compiled and a certified financial statement?

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  14. Is it possible for a company to have a positive cash flow and a negative net income?

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