Cash Flow Statement

Cash flow is the movement of cash into or out of a business, project, or financial product.

Statement of cash flow in a business's financials

The (total) net cash flow of a company over a period (typically a quarter or a full year) is equal to the change in cash balance over this period: positive if the cash balance increases (more cash becomes available), negative if the cash balance decreases. The total net cash flow is the sum of cash flows that are classified in three areas:

Operational cash flows: Cash received or expended as a result of the company's internal business activities. It includes cash earnings plus changes to working capital. Over the medium term this must be net positive if the company is to remain solvent.

Investment cash flows: Cash received from the sale of long-life assets, or spent on capital expenditure (investments, acquisitions and long-life assets).

Financing cash flows: Cash received from the issue of debt and equity, or paid out as dividends, share repurchases or debt repayments.

Examples Description Amount ($) totals ($) Cash flow from operations +10   Sales (paid in cash) +30   Materials -10   Labor -10 Cash flow from financing +40   Incoming loan +50   Loan repayment -5   Taxes -5 Cash flow from investments -10   Purchased capital -10 Total +40