What is a cash flow statement and how is it used?

A cash flow statement is a financial statement that shows the inflow and outflow of cash in a business or an individual's finances over a period of time. It summarizes the changes in cash and cash equivalents by categorizing the sources and uses of cash into three main categories: operating activities, investing activities, and financing activities.

Operating activities involve the daytoday operations of the business, such as sales and expenses. Investing activities involve buying and selling of longterm assets, such as property or equipment. Financing activities involve the borrowing and repayment of loans, as well as the issuance and repurchase of stocks or other securities.

The purpose of a cash flow statement is to help businesses and individuals understand how much cash they have on hand, where that cash is coming from, and how it is being used. It can also help in identifying cash flow problems and taking appropriate measures to address them. By analyzing the cash flow statement, businesses and individuals can make informed decisions about their financial operations, such as investing in new equipment, taking on new debt, or making changes to their operating procedures.