What is cashflow statement and different methods?

Question

Accepted Answer

Cashflow statement shows the inflow and outflow of cash over a period of time.

Cashflow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
It is divided into three sections: operating activities, investing activities, and financing activities.
Direct method involves listing all cash inflows and outflows from operating activities, while indirect method starts with net income and adjusts for non-cash items.
Cashflow statement helps investors and analysts evaluate a company's ability to generate cash and its liquidity.
Example: If a company reports a positive net income but negative cash flow from operating activities, it may indicate issues with collecting receivables or managing inventory.

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