Question

What are the three key sections of the Cash Flow Statement? What is each section designed to tell you?

Answer 1

Cash flow statement is a financial statement which analyses how cash and cash equivalents effected by the changes in balance sheet and income statement.

Analysis break down into three key components as stated below;

1. Operating activities,

2. Investing activities,

3. Financing activities.

These are specifically designed for finding out the liquidity and solvency position of an entity.

From Operating activities section we came to know how cash payments and collections have been done in relation to the production, sales, and delivery of products of the firm, and net impact of it in the firm.,

Investing activities section reveals cash payments and collections by way purchasing and selling of fixed assets of such firm.,

Financing activities are all about inflow and outflow of cash through issuing and redemption activities in relation to securities (which includes shares, bonds, long term debt funds etc.,).

Thank you:-)

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