The Essentials of Finance and Accounting for Nonfinancial Managers, 2nd Edition

CHAPTER THREEThe Statementof Cash Flows

The third critical financial statement, along with the balance sheet and the income statement, is called the statement of cash flows. In the past, it was called the sources and uses of funds statement, which is a more accurate description of the information it contains. It describes in summary form how the company generated the cash flows it needed (sources) to finance its various financial opportunities and responsibilities (uses) over the past year. The sources and uses of funds statement for Metropolitan Manufacturing Company is shown in Exhibit 3-1. As you go through it, notice that the line items appear on the balance sheet in the column labeled “Changes.” In fact, the sources and uses of funds statement ...