cash flow format and classification

Cash flow refers to the inflow and outflow of cash in a business over a specific period of time. A cash flow statement is a financial statement that presents the cash inflows and outflows of a business during a given period. The statement is divided into three sections: operating activities, investing activities, and financing activities.

1. Operating Activities: Operating activities refer to the cash inflows and outflows that arise from a company's primary business operations. This section includes cash received from customers for sales of goods or services, payments made to suppliers and employees, interest paid or received, and income tax paid.

2. Investing Activities: Investing activities refer to the cash inflows and outflows that arise from the purchase or sale of long-term assets. This section includes cash used to purchase or sell property, plant, and equipment, intangible assets, and investments.

3. Financing Activities: Financing activities refer to the cash inflows and outflows that arise from the financing of a business. This section includes cash received from issuing debt or equity securities, payments made to repay debt or distribute dividends, and other financing-related activities.

The cash flow statement shows the net increase or decrease in cash and cash equivalents over the period covered by the statement. The cash flow statement is an essential tool for investors, creditors, and other stakeholders as it provides insights into a company's liquidity, solvency, and financial health.