Cash Flow Statement

The cash flow statement is a crucial financial statement. It indicates how cash for varied functions is sourced and used in firms. Another common name for the cash flow statement is the statement of cash flows. Thus, the cash flow statement effectively indicates the cash figures generated and utilised by a firm for the specified period. A firm’s financial strength can be easily inferred through this statement. The cash flow statement is an indicator of where the cash is sourced from and where and how it is utilised. The cash included in the cash flow statement denotes the short-term cash available and liquid investments that can easily be converted into cash.

Cash flow is impacted by 3 main activities of any firm:

  • Financing activities
  • Operating activities
  • Investing activities

It is important for students to learn about the Direct, as well as the Indirect way of calculating cash flows. While the direct method takes into account all the cash inflows and outflows under the three heads stated above, the indirect method takes the net income as the starting point, and adjusts the various transactions to arrive on the final cash flow.

Significance of the Cash Flow Statement

As per law, it is compulsory to present the cash flow statement as a part of the quarterly financial reports. It is crucial to study a cash flow statement as it provides data related to the earning capacity of an enterprise. This statement also depicts the efficiency of the management in employing extant cash flows. It also depicts the capability of the management team to generate cash flows in the times to come. Thus, the cash flow statement is useful in providing data related to the functional, investing and economic actions of a firm.

Whether a company has done the cash flow calculations properly or not will also reflect in the balance sheet. If you fail to manage the cash inflow and outflow in a balanced manner, then the liquidity of the business in the long run will suffer, as well the ability to meet financial commitments. Learn from the experts and be a help your company manage its cash flows better. Place your order for Cash Flow Statement assignment help today and get the best prices.


1)      What do you think can be the major sources of cash in a company?

A company can generate cash chiefly from the following:

  1. Cash Sales
  2. Selling of assets
  3. Generation of new capital
  4. Loans/Advances

2)      Download cash flow statements of any firm for the last two years and try to identify the differences.