Understanding Cash Flow Statement – How To Make And Read Cash Flow Statement
The cash flow statement sometimes is another financial statement that investors should become familiar with. It is another tool for managers and investors that shows how changes in the balance sheet and income affect cash. The cash flows are broken down into three parts: operating activities, investing activities, financing activities and the cash flows from each source. These changes shown on the cash flow statement are useful in determining the immediate health of the firm and its ability to function as an ongoing concern.
Operating activities are the production, sales, and delivery of the companys products. These are the regular day to day activities of the firm that put it into business in the first place. This category will include figures like depreciation, taxes, and amortization of intangible assets (things like brand-name recognition).
Investing activities include the purchase and sale of long-term assets. Items here will include capital expenditures and investments. All investments made on behalf of the firm are including here. Purchases of plant, property and...
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