Statement of Cash Flows by Jeff Schmidt

Statement of Cash Flows

A financial statement that reports the cash generated and spent during a specific period of time.

Operating Activities

The principal revenue-producing activities of the entity, including cash flows from sales, purchases, and other expenses.

Direct Method

A presentation of operating cash flows as a list of cash inflows and outflows related to operating activities.

Indirect Method

A presentation of operating cash flows that reconciles profit to cash flow.

Cash Flow

Inflows and outflows of cash and cash equivalents.

Capital Expenditures (CapEx)

Cash spent on purchasing property, plant, and equipment (PP&E) that is necessary to keep the company running.

Net Increase/(Decrease) in Cash

The sum of cash flows from operating, investing, and financing activities, showing the overall change in cash for a given period.

Depreciation and Amortization (D&A)

Non-cash expenses that allocate the cost of tangible and intangible assets over their useful lives.

Working Capital

The difference between a company’s current assets and current liabilities.

Financing Activities

Cash flows related to changes in a company's capital structure, including issuing or repaying debt and equity.

Cash Equivalents

Short-term investments and assets that can easily be converted into cash.

Cash Flow Statement Sections

The three sections are operating activities, investing activities, and financing activities.

Quality of Earnings

The assessment of a company's earnings based on the comparison of cash from operating activities to net income.

Opening Cash Balance

The last year’s closing cash balance, used as the starting point in a cash flow statement.

Investing Activities

Cash flow related to the acquisition and disposal of non-current assets.

Issuance of Equity

A cash inflow resulting from a company offering shares to investors.

Interest Paid/Received

Under U.S. GAAP, always treated as operating cash flows.