Cash Flow Statement


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.


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BREAKING DOWN '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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  1. Why is a company's Cash Flow from Financing (CFF) important to both investors and ...

    A company's cash flow from financing activities (CFF) is important to investors and creditors because it depicts how much ... Read Full Answer >>
  2. How is cash flow from operating activities calculated?

    Cash flow from operating activities can be calculated directly or indirectly. Either way, cash from operating activities ... Read Full Answer >>
  3. How should I evaluate a company with negative cash flow investing activities?

    A company with a negative cash flow from investing activities should be evaluated on the sources and uses of cash under its ... Read Full Answer >>
  4. How can you use a cash flow statement to make a budget?

    To use the cash flow statement to make a budget, a company needs to combine the operating cash flow portion of its cash flow ... Read Full Answer >>
  5. What is the most important "C" in the Five Cs of Credit?

    Financial institutions attempt to mitigate the risk of lending to unworthy borrowers by performing a credit analysis on individuals ... Read Full Answer >>
  6. What is the purpose of drawing up a cash flow statement?

    The purpose of drawing up a cash flow statement is to see a company's sources of cash and uses of cash, over a specified ... Read Full Answer >>
  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?

    Cash flow from operating activities is calculated by adding net income, total non-cash expenses and net change in working ... Read Full Answer >>
  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?

    All publicly-traded companies are required to provide financial statements, including a balance sheet, cash flow statement ... Read Full Answer >>
  14. Is it possible for a company to have a positive cash flow and a negative net income?

    This situation may seem a bit counter-intuitive at first, but it is actually quite common and not too difficult to understand. ... Read Full Answer >>

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