What is a Cash Flow Statement?

A Cash Flow Statement is a financial document that summarizes both cash inflows and cash outflows over a specific period of time. It provides a clear view of how cash is generated and used within a business, illustrating the company’s operating, investing, and financing activities. This is crucial for assessing the liquidity and overall financial health of the business, enabling stakeholders to understand how effectively the company is managing its cash.

By detailing where cash comes from (inflows) and where it goes (outflows), this statement helps in financial planning and decision-making. It is an essential tool for investors, creditors, and management to determine the cash position and the ability to fund operations, pay debts, and make future investments.