How to Read a Cash Flow Statement

The Cash Flow Statement tracks the actual cash entering and leaving a company, which is crucial because net profit on paper doesn't always equal real cash in hand.

The Three Cash Flow Divisions

• Operating Cash Flow: Cash generated from core business operations. This must always be positive for healthy companies.
• Investing Cash Flow: Cash spent on capital expenditures (machinery, property) or investments.
• Financing Cash Flow: Cash flows from raising capital, paying dividends, or paying off bank debt.