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Components of a Cash Flow Statement

What is included in each section of the statement of cash flows?
What does each section tell you about the company?
Which of the three classifications of activities included on a statement of cash flows is the most important?

Solution Preview

The cash flow statement is partitioned into cash flow resulting from operating activities, cash flow resulting from investing activities, and cash flow resulting from financing activities.

a. Operating activities
Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising and shipping the product. Examples of activities under the operating section include:
- Cash collection due to receivables
- Cash payments due to payables and inventory purchase
- Other cash expenses due to operating activities

b. Investing activities
Investing activities focus on the ...

Solution Summary

The solution gives 431 words to explain what each section of a statement of cash flows tells you about a company and are the most important.

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