Cash Flow Statement
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Cash Flow
Statement
The statement of cash flows shows how money enters and leaves a business. There are three main categories: Cash From or Used in Operating Activities, Cash From or Used in Investing Activities, and Cash From or Used in Financing Activities.
Since cash is actual money, the numbers are not based on assumptions or estimates. Positive numbers represent cash coming in, negative numbers represent cash going out, and net cash is the total of the two. Below is a sample cash flow statement, shown in millions.
Cash from Operating activities
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Earnings $248
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Depriciation $239
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Accounts receivable ($108)
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Inventory $244
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Current assets ($18)
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Accounts Payable ($107)
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Cash from Operations $498
Cash from Investing activities
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Property, plant & equipment ($205)
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Other long-term assets $20
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Cash from Investing ($185)
Cash from Financing activities
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Credit line ($50)
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Current portion of long term debt $1
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Long term debt ($121)
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Other long term liabilities $34
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Equity (dividend) ($166)
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cash from Financing ($302)
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Change in Cash $11
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Cash at Begining $72
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Cash at End $83
Cash from Operating activities
-
Earnings $248
-
Depriciation $239
-
Accounts receivable ($108)
-
Inventory $244
-
Current assets ($18)
-
Accounts Payable ($107)
-
Cash from Operations $498
Cash from Investing activities
-
Property, plant & equipment ($205)
-
Other long-term assets $20
-
Cash from Investing ($185)
Cash from Financing activities
-
Credit line ($50)
-
Current portion of long term debt $1
-
Long term debt ($121)
-
Other long term liabilities $34
-
Equity (dividend) ($166)
-
cash from Financing ($302)
-
Change in Cash $11
-
Cash at Begining $72
-
Cash at End $83
• Cash Flow from Operating Activities, which can also be referred to as cash provided by or used for operating activities, encompasses all the cash flow associated with the day-to-day operations of the business. This includes cash received from customers for their payments, cash disbursed by the company to settle its own bills, cash utilized for salary payments, rent, utilities, and all other activities necessary to sustain the business.
• Cash From or Used in Investing Activities refers to the financial activities undertaken by the business, excluding those by the owners. This section covers important aspects such as buying assets for the company, like trucks, machines, or other items. Any cash flow related to the purchase or sale of assets is recorded in this part of the statement. Moreover, this section also includes investments in acquiring other businesses, financial securities, and buying or selling buildings.
• Financing Activities refer to the financial transactions made by a company. This includes taking out loans, repaying loans, repurchasing company stock, paying dividends to shareholders, or selling additional stock. All of these cash outflows are categorized under this section.
There is a lot of useful information in the cash flow statement. The first section shows operating cash flow, which in many ways is the single most important number indicating the health of a business. Our financial statements training classes go through the key items related to cash flow and the cash flow statements. Get a clearer picture of what your company is doing and what free cash flow is.
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