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The Finance Book by Si Hussain, Stuart Warner

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5 Cash flow statement

‘Cash is king. Get every drop of cash you can get and hold onto it.’

Jack Welch, author and chairman/CEO of General Electric between 1981 and 2001

In a nutshell

The CFS (cash flow statement or statement of cash flows) is one of the primary financial statements in a set of accounts.

The CFS shows the inflows and outflows of cash during a reporting period. It explains how the cash balance shown in the balance sheet has increased or decreased from the previous reporting period.

The CFS contains three major headings, under which inflows and outflows of cash are categorised:

  • Operating activities
  • Investing activities
  • Financing activities.

For a business, ‘cash is king’ and analysing the CFS is a highly informative way to ...

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