Investing term

What is Cash flow statement?

The cash truth — actual cash in and out, split into operating, investing, and financing activities.

The cash flow statement tracks the actual cash moving in and out of a company, split into operating, investing, and financing activities. Because profit on the income statement relies on accounting judgments, this statement is the reality check — a company can report profits while bleeding cash. Operating cash flow in particular is one of the hardest numbers to fake.

For example

A company posts a $2M accounting profit but its cash flow statement shows cash falling — a red flag that the "profit" hasn't turned into real money.

Cash flow statement is taught hands-on in Stage 14 — Reading Financial Statements.

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Related terms

Accounts receivable (A/R)Money customers owe the company for goods or services already delivered but not yet paid.AccrualsAccounting entries that record revenue or expense before cash actually moves.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.
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