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Cash Flow Statement

   Also found in: Acronyms, Wikipedia 0.15 sec.
Cash Flow Statement
A statement every publicly-traded company must file with the SEC each quarter indicating all cash inflows and cash outflows from all sources, whether they are business activities or the company's investments. This is considered one indication among many of a company's financial health. A business activity may be reported as income if a company has agreed to a contract, even if no money has actually changed hands; a cash flow statement seeks to avoid this by showing how much cash the company has on hand. It is also called an application of funds statement.

Cash Flow Statement

What Does Cash Flow Statement Mean?

One of the quarterly financial reports a publicly traded company is required to disclose to the SEC and the public. It provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and its external investment sources as well as all cash outflows that pay for business activities and investments during a specified quarter.

Investopedia explains Cash Flow Statement

Because public companies tend to use accrual accounting, the income statements they release each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, that contract will be recognized as revenue (and therefore income), but the company may not yet receive the cash from the contract until a later date. Although the company may be earning a profit in the eyes of accountants (and paying income taxes on it), the company may, during the quarter, end up with less cash than it had when it started. Even profitable companies can manage their cash flow inadequately. That is why the cash flow statement is important: It helps investors see if a company is having cash troubles.

Related Terms:
Accrual Accounting
Balance Sheet
Cash and Cash EquivalentsCCE
Generally Accepted Accounting PrinciplesGAAP
Income Statement



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