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What is a Statement of cash flows?

Statement of cash flows (Definition)

A statement of cash flows links the income statement and the balance sheet, showing the inflow and outflow of company funds. Also known as a cash flow statement, it is one of the three most important financial statements, and it shows how much money a company makes and spends over a certain amount of time (month, quarter, or year). The cash flow statement has three sections:

  • Financing activities are those that the size and composition of the entity's equity capital or borrowings, such as bonds and dividends
  • Operating activities are the things that make money for the company, such as selling products
  • Investing activities is money from the purchase and sale of long-term assets and other investments, such as property
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