An introduction to cash flow statement

Introduction Now that we have covered the profit & loss statement and the balance sheet, it is time to focus on the cash flow statement. The cash flow statement is a very simple yet powerful financial statement. As its name suggests, it simply provides details of all the cash transactions incurred during a period. For investors to understand this financial statement, it is crucial to understand more about its history, structure, and contents. What is a cash flow statement? Why do we need a cash flow statement? After the profit and loss statement and the balance sheet, the cash flow statement is the third and final component of the modern accounting framework. By aggregating the cash that comes in and goes out under different heads, the cash flow statement gives its readers one crucial number: net cash flow. This is the change in the total cash available with a company during the accounting period. But to understand why investors need to know the net cash flow, one needs to step back and understand the profit and l

This article was originally published on February 08, 2022.