Statement of Cash Flows

The statement of cash flows is one of the four basic financial statements required by GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). It is concerned with the flow of cash into and cash out of the business, breaking the analysis down to operating, investing, and financing activities. The statement of cash flows helps investors evaluate the short-term viability of a company, particularly its ability to pay bills.

A substantial, positive cash flow is generally a sign of a healthy company. Investors also must remember that companies in growth mode often have a negative cash flow.

Formula

Net Operating Cash Flow + Net Financing Cash Flow + Net Investing Cash Flow = Net Cash Flow