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Cash Flow Statement

The Cash Flow Statement provides insight into an organization's cash flows during a fiscal year. It shows where cash comes from, how it is spent, and how the organization's cash position changes over time.

Structure of the Cash Flow Statement​

The Cash Flow Statement consists of three sections.

1. Cash Flow from Operating Activities​

This section shows the cash flows generated by the organization's day-to-day business operations, such as:

  • Cash receipts from sales

  • Payments for operating expenses

  • Changes in working capital

A positive operating cash flow indicates that the organization generates sufficient cash from its regular business activities.

2. Cash Flow from Investing Activities​

This section includes cash flows related to investments, such as:

  • The purchase or sale of fixed assets

  • Investments in other companies

This cash flow is often negative because investments typically require cash.

3. Cash Flow from Financing Activities​

This section contains cash flows related to the financing of the organization, such as:

  • Loans

  • Loan repayments

  • Contributions to or withdrawals from equity

Total Cash Flow

These three sections together make up the Total Cash Flow. This shows the increase or decrease in cash and cash equivalents during the selected period.

Interpretation

The Cash Flow Statement helps assess:

  • The organization's liquidity position

  • Its ability to generate cash flows

  • The sources and uses of cash

Some important points to consider:

  • A positive operating cash flow is generally a sign of a healthy business.

  • Investing activities often result in a negative cash flow.

  • Financing activities show how the organization funds its investments and business operations.

Working Capital in Factview

Factview groups changes in current assets and current liabilities under Changes in Working Capital (Excluding Cash and Cash Equivalents). This provides a clear overview of operating cash flow and makes it easier to identify the factors driving changes in cash flow.