Q&A of the Week December 29, 2021

Question

What is a cash flow statement?

Answer

A cash flow statement (CFS) is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. It serves as a measurement of a company's performance and shows how much cash you have on hand for a specific period of time.

A CFS:

- shows liquidity,

- indicates changes in assets, liabilities, and equity, and

- helps predict future cash flows.

Along with the CFS, the other main financial statements are the balance sheet and income statement.