What is included in the Statement of Cash Flows?

The Statement of Cash Flows is designed to provide a comprehensive view of all cash inflows and outflows during a specific period, categorizing them into three main activities: operating, investing, and financing.

Operating activities reflect the cash generated or used in the core business operations, including cash received from customers and cash paid to suppliers and employees. This section is vital as it shows how well the company is performing its day-to-day business.

Investing activities involve cash flows generated from buying and selling long-term assets, such as property, plant, and equipment, as well as investments in securities. This part of the statement illustrates how a company is using its cash for long-term growth.

Financing activities encompass cash flows related to borrowing and repaying debt, issuing or buying back shares, and paying dividends. This portion highlights how the company finances its operations and growth.

Including all of these activities provides stakeholders with crucial insights into the overall cash position of the business and how it meets its obligations, invests in future growth, and interacts with shareholders. This comprehensive approach is what distinguishes the Statement of Cash Flows and demonstrates its importance in financial reporting.