Business Skills All-in-One For Dummies

Chapter 4

Reporting Cash Sources and Uses in the Statement of Cash Flows

IN THIS CHAPTER

Clarifying why the statement of cash flows is reported

Presenting the statement of cash flows in two flavors

Earning profit versus generating cash flow from profit

Reading lines and between the lines in the statement of cash flows

Offering advice and observations on cash flow

You could argue that the income statement (see Book 1, Chapter 2) and balance sheet (see Book 1, Chapter 3) are enough. These two financial statements answer the most important questions about the financial affairs of a business. The income statement discloses revenue and how much profit the business squeezed from its revenue, and the balance sheet discloses the amounts of assets used to make sales and profit, as well as its capital sources. What more do you need to know? Well, it’s also helpful to know about the cash flows of the business.

This chapter explains the third primary financial statement reported by businesses: ...