What is a company’s Cash Flow Statement?

 

A company releases a “Statement of Cash Flows” every quarter as part of their 10-Q filing (which also includes a balance sheet statement and income report).

 

The Statement of Cash Flows details the movement of cash around the company.  By reading and understanding the statement of cash flows you can determine many useful metrics for evaluating a company. Is the company cash flow positive (is it generating cash)? Is the company burning through cash too fast? What is the company’s free cash flow (FCF)? What is the company spending its cash on?

 

The Statement of Cash Flows is one of the most important and one of the most widely followed financial reports a company releases. Analysts favor the cash fl0w statement because it is harder for a company’s accountants to “fudge” the numbers. Income Statements and Balance Sheets can be manipulated with accounting gimmicks, but it is harder (though far from impossible) for a company to fake cash flow.

 

Shown below is an example from Intel’s (INTC) 2012 2nd Quarter financial results (which is found here):

(click image to enlarge)

 

 

We go through the cash flow statement in great detail in our Guide to Investing with the Cash Flow Statement.

 

 

Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports, Defines this as:

“Cash flow statement tracks the movement of cash through the business over a period of time.

A company’s cash flow statement is just like a check register… Recording all the companies transactions that use cash or supply cash.

The cash flow statement shows:

  • Cash on hand at the start of the period.
  • Cash received in the period.
  • Cash spent in the period.
  • Cash on hand at the end of the period.”

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