Vareto Finance Glossary

Cash Flow Statement (CFS)


A company's cash flow statement (CFS) is a financial statement summarizing its cash and cash equivalents (CCE) that come in and go out. It measures how well a company can manage its cash position, or simply, how well the company can generate cash to fund its operating expenses or repay its debt obligations. Apart from the balance sheet and the income statement, CFS is another important financial statement crucial to any business.


CFS mainly comprises of:a. Cash from operating activitiesb. Cash from investing activitiesc. Cash from financing activities

Why it matters

With a company's cash flow statement, stakeholders and investors can measure the company's financial strength, its liquidity levels, profitability, and growth prospects. It helps in determining whether a company has sufficient liquidity or cash to cover its expenses. It can be used to predict future cash flow to aid the budgeting process.