As I have stated I am old. When I went through college the Cash Flow Statement did not exist in it’s current form. I was taught about the Statement of Change in Financial Position. Quite different from the Cash Flow format.
I understand the old statement was not easy to understand but it was easier to prepare than the Cash Flow. The Cash Flow has three main sections shown below:
Cash Flows from Operations (CFO)Operating cash flow describes money flows from ordinary operations, like production and the sale of goods. This is the figure that determines whether or not a company has enough funds coming in to pay bills and operating expenses. There must be more operating cash inflows (CFO) than outflows to have long-term viability.
Cash Flows from Investing (CFI)Investing cash flow (CFI) is a figure that represents how much cash has been generated or spent from investment-related activities in a specific time period.
Cash Flows from Financing (CFF)Financing cash flow (CFF) demonstrates the net flows of cash that are used to fund the business and its working capital. Activities can include transactions that involve issuing debt or equity and paying dividends. CFF provides investors with insight into an organization’s cash position and how well the capital structure is managed.
This information can be relevant if timely. Yet, I still hate preparing the damn thing.