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What is a Cash Flow Statement?

A statement of cash flows is an accounting report which describes the changes in cash flows, which is distinct from net income. Cash Flow Statements are an important part of corporate accounting.

While net income reports include non-cash items such as depreciation, as well as accounts receivable and accounts payable, cash flow statements will isolate the cash transactions in and out of the company. This helps get an idea of whether the company can pay its bills in a timely manner and so forth.

Cash flow statements include cash from operations, investing, and financing, as well as net increases or decreases in cash. It can be computed using the Direct Method, or the Indirect Method.

Some examples of cash flow activity include capital expenditures and dividends paid to shareholders. The SEC requires this document to be filed quarterly if a company is publicly traded.

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Keywords: dividends, Securities and Exchange Commission (SEC), depreciation, capital expenditures, Cash Flow Statement,