Updated on February 03, 2024Table of Contents
A cash flow statement is a financial statement that summarizes the cash inflows and outflows of a company over a particular period. It is used to provide information about a company’s liquidity and cash-generating ability.
Components of a Cash Flow Statement:
The Cash Flow Statement follows the indirect method:– The indirect method calculates cash generated from operating activities by subtracting depreciation and amortization from the change in current assets and current liabilities.- The indirect method is preferred by many companies because it is more concise and easier to prepare than the direct method.
The Cash Flow Statement is used for:
Here is an example of a cash flow statement:
Cash Flow Statement for ABC Company for the Year Ended December 31, 2022
Cash generated from operating activities:Cash received from customers $50,000Cash paid to suppliers $20,000Cash paid for interest $5,000Cash paid for taxes $2,000
Cash generated from investing activities:Cash received from sale of assets $10,000Cash paid for purchase of assets $25,000
Cash generated from financing activities:Cash received from issuance of debt $15,000Cash paid for repayment of debt $5,000
Net change in cash $40,000
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