Cash Flow Statement: What It Is & Why It Matters

A cash flow statement shows the inflow and outflow of cash in a business over a specified period of time. It provides a summary of the company's cash position and is used to analyze the company's ability to generate cash and manage its cash resources. The statement can be used to identify sources and uses of cash, to evaluate liquidity, to monitor changes in cash balances, and to assess the company's ability to meet its financial obligations. The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities.