Cash flow statement a financial statement that provide a summary of cash receipt and payments during the period. In one line it can be described as cash flow statement is summary of cash book of any organization.
Classification of Cash Flow
Cash flow statement classifies cash receipt and payments by operating, investing and financing activities.
Operating Activities: Cash flow from operating activities is determined from the principal operating activities. Examples of operating activities are:-
Positive net cash flow from operating activities is a key indicator of any organization’s ability to maintain its operating capacity.
Investing Activities : Cash flow from investing activities shows the ability of organization’s for future cash flow. Examples of cash flow from investing activities are:-
Financing Activities:Financing activities are these activities by which a organization’s ensure fund to run the enterprises. Examples of financing activities are as under:
Format of Statement of Cash Flows
The format may vary according to the nature of each organization. But the common format is as under: