Cash Flow Statement

A financial statement showing all actual cash inflows and outflows during a period, categorised into operating, investing, and financing activities, revealing how a business generates and spends cash.

A business can appear profitable on paper while simultaneously running out of cash. The cash flow statement reveals the truth about liquidity and is often the most important financial document for day-to-day business survival.

A founder's income statement shows a profitable quarter, but her cash flow statement reveals negative operating cash flow because a large client has not yet paid. The statement flags a looming cash crunch before it becomes a crisis.