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Accs Project 2

A Cash Flow Statement is a financial report detailing the movement of cash in and out of a business over a specific period, highlighting its cash earnings and expenditures. It is crucial for understanding a company's liquidity, aiding in budgeting, and assisting investors and lenders in decision-making. The statement consists of three main parts: cash flow from operating activities, investing activities, and financing activities.

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8 views2 pages

Accs Project 2

A Cash Flow Statement is a financial report detailing the movement of cash in and out of a business over a specific period, highlighting its cash earnings and expenditures. It is crucial for understanding a company's liquidity, aiding in budgeting, and assisting investors and lenders in decision-making. The statement consists of three main parts: cash flow from operating activities, investing activities, and financing activities.

Uploaded by

mayra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is a Cash Flow Statement?

A Cash Flow Statement is a financial report that shows the actual movement of cash in and
out of a business during a specific period (usually a financial year).

It helps us understand how a business earns and spends its cash and whether it has enough
liquid cash to run its operations smoothly.

💬 In simple words:​
"It tells us where the money came from, where it went, and how much cash is left at
the end of the period."

💡 Importance of a Cash Flow Statement


📈 Shows actual cash position (not just profits)
🧾 Helps in budgeting and financial planning
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👀 Assists investors in decision-making


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🏦 Useful to banks and lenders before giving loans


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🚦 Indicates if the business is financially healthy


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Three Main Parts of a Cash Flow Statement


1️⃣ Cash Flow from Operating Activities

Cash earned or spent through regular business operations (like sales, salaries, rent).​
Example: Cash received from customers, cash paid to suppliers and employees.

2️⃣ Cash Flow from Investing Activities

Cash related to buying or selling assets like land, buildings, machinery, or investments.​
Example: Buying new equipment, selling an old vehicle.

3️⃣ Cash Flow from Financing Activities

Cash from borrowing or repaying loans, issuing shares, or paying dividends.​


Example: Loan taken from bank, dividend paid to shareholders.

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