What is a Cash Flow Statement?
A Cash Flow Statement is a financial report that tracks the actual movement of cash entering and leaving your cashbox and bank accounts over a specified period, highlighting true available liquidity.
Three Categories of Cash Flow
- Operating Activities: Cash collected from customer sales minus cash paid for operating expenses.
- Investing Activities: Cash spent on purchasing equipment, machinery, or fixed assets.
- Financing Activities: Cash from capital injections, loan disbursements, or owner draws.
Frequently Asked Questions
Profit is an accounting measure that may be trapped in uncollected customer debts. Cash flow reflects physical cash received into your bank or cashbox available to meet immediate obligations.
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