Statement of Cash Flow and Segregation of Cash Flows

Statement of Cash Flow
· Report the impact of a firm's operating, investing and financial activities on cash flows over an accounting period.
· Convert the accrual basis of accounting used in the income statement and balance sheet back to a cash basis.

Analyst will consider:
· How the company obtains and spends cash
· Why there may be differences between net income and cash flows
· If the company generates enough cash from operation to sustain the business
· If the company generates enough cash to pay off existing debts as they mature
· If the company has enough cash to take advantage of new investment opportunities

Segregation of Cash Flows
· Operating activities
· Investing activities
· Financing activities


Operating activities
+ investing activities
+ Financing activities
___________________
= change in cash balance
+ Beginning cash balance
_____________________
= Ending cash balance