Fire Your Stock Analyst!: Analyzing Stocks on Your Own

Statement of Cash Flows

Shows the cash generated or consumed by the company’s business operations, and investing and financing activities. The cash flow statement consists of three sections:

• Operating

• Investing

• Financing activities

Unlike the quarterly income statement that shows each quarter’s results separately, the quarterly cash flow statement shows fiscal year-to-date totals for each line item.

Operating Activities

The operating cash flows can be shown in one of two formats. The direct method lists the cash received and disbursed by line item. The more widely used indirect method starts with the net income and adds back the noncash deductions that reduced reported earnings, and subtracts real cash expenses that, according to accounting rules, ...