How to Read and Interpret Financial Statements

6

The Statement of Cash Flows

Learning Objectives By the end of this chapter, you should be able to: • Describe the kinds of information disclosed by the statement of cash flows. • List the three key areas of cash flows disclosed in a statement of cash flows. • Identify and describe the two accepted statement of cash flows formats. • Explain the free cash flow concept

INTRODUCTION

A balance sheet (or statement of financial position, as it is often called) is a snapshot of the amounts of assets, liabilities, and owners’ equity at a specific moment in time. Balance sheets are prepared at least annually, often quarterly, and even perhaps ...