Cash 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. Cash flow from operating activities appears in the first section of the Statement of Cash Flows. There are a number of different ways to calculate cash flow from operating activities, but the American Institute of Certified Public Accounts recommends starting with net income as stated on the income statement. Net income is then adjusted for working capital changes and non-cash accruals that have been made throughout the reporting period. These adjustments include depreciation, amortization, increases and decreases in receivables, increases and decreases in payables, changes in inventory levels, and any expense or revenue accruals. Cash is the lifeblood of any business. Therefore it is very important for managers to know how much cash has been generated from operating activities. Knowing how much cash to expect from ongoing operating activities helps them plan their cash flow budgeting for things like future capital investments, hiring and operating expenses. Investors also like to know how much cash a company generates from its ongoing activities. Steady cash growth is indicative of an efficient, profitable, well-managed company and thus a good investment.