Cash Flow Statement Definition | Finance Strategists | Your Online Finance Dictionary

hi i'm rainey with finance strategist in this lesson we're going to cover [Music] the cash flow statement also called the statement of cash flows is a financial statement showing how cash flows in and out of a company over a specific period of time by looking at a company's cash flow statement one can see whether the company has enough cash flowing in to fund its operations pay its debts and return money to shareholders via dividends or stock buybacks the cash flow statement shows how cash moves in and out of a company's accounts via three main channels operating investing and financing activities cash from operating activities often termed operating cash flow is the amount of cash left over after all the cash income and cash expenses for the core operations are received and paid for cash from investing activities lists cash used to buy and sell investments and long-term assets such as capital expenditures cash from financing activities shows cash flows to and from owners investors and creditors like banks it includes changes in debt and equity as well as dividends and share buybacks the sum of the cash flows from the three categories is termed net cash flow often listed as increase or decrease in cash and equivalence this number will be equal to the changes in cash and cash equivalents on the balance sheet for the same period an important metric derived from the cash flow statement is free cash flow which tells investors how much cash a company has left after expenses required to maintain and grow the business this is calculated by subtracting capital expenditures from operating cash flow a cash flow statement is one of three core financial statements released by publicly traded companies when they report earnings the other two are the income statement and balance sheet [Music] the income statement differs from the cash flow statement because cash and income are different the income statement recognizes revenue and expenses when the product or service is provided not necessarily when it is paid in cash if a customer buys a product on credit the amount is shown as revenue on the income statement but it won't be included in the cash flows until the customer actually pays for the product the balance sheet by contrast is a snapshot showing what a company owns as assets and owes as liabilities the cash flow statement only shows actual cash flowing in and out of the company this is crucial because cash is the lifeblood of a business without a steady stream of cash companies can go out of business let's hear from you which is the most important of the three core financial statements cash flow statement income statement or the balance sheet leave a comment below [Music] for more information visit finance strategists strategies for you

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