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Attached.

Running head: CASH FLOW STATEMENT

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Cash Flow Statement
Institution
Name

CASH FLOW STATEMENT

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The Purpose of Cash Flow Statement
Since 1987, the cash flow statement (CFS) has been a very crucial part of a company’s
financial reports. The cash flow statement records the amount of cash and cash equivalents
entering and leaving a company. With CFS investors are able to understand cash sources,
spending strategies and how operations in a company are running. The CFS is unique because it
does not include the amount of credited future incoming and outgoing cash like in the balance
sheet and income statement. The entrance and exit of financing, investing and core operations
determines cash flow.
Operations
This is the use of business operations to measure cash inflows and outflows. The products
and/or services generate cash which constitutes to the cash flow’s operation components.
Operations cash includes cash changes in accounts payable, inventory, depreciation and accounts
receivable. Calculation of cash flow involves adjusting the net income by subtracting or adding
credit transactions, expenses and revenue. However, there is need for re-evaluation of non-cash
items during cash flow calculations involving operations. For example depreciation which is not
a cash expense is added to net sales during cash flow operations. CFS only accounts for asset
income when it is sold.
Investing
Investment cash comes from changes in investments, assets and equipment. Because cash
is used to buy short-term assets like marketable securi...