What do you understand by cash flow statement?

Question

Accepted Answer

Cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

It provides information about the cash generated and used during a specific period.
It consists of three sections: operating activities, investing activities, and financing activities.
Operating activities include cash flows from day-to-day business operations.
Investing activities include cash flows from buying and selling assets.
Financing activities include cash flows from borrowing, repaying debt, and issuing or buying back stock.
It helps in assessing the liquidity, solvency, and financial flexibility of a company.
Example: If a company's cash flow from operating activities is consistently negative, it may indicate a problem with generating enough cash to sustain operations.

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