Cash Flow Opens Doors

Understanding cash flow is a key component in every business.

KEY TAKEAWAYS

• A cash flow statement (CFS) is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.
• The CFS measures how well a company manages its cash position, meaning how well the company generates cash.
• The CFS complements the balance sheet and the income statement.
• The main components of the CFS are cash from three areas: operating activities, investing activities, and financing activities.
• The two methods of calculating cash flow are the direct method and the indirect method.