ABSTRACT
The cash flow statement shows cash inflows and cash outflows within an accounting period, usually a year. The classified cash flow statement has three categories: First, cash flows from operating activities focuses on the income statement and how the income statement relates to operating cash flows. Second, cash flows from investing activities focuses on fixed assets and how investments and disinvestments influence cash flows. Third, cash flow from financing activities focuses on long-term debt and equity, and how these sources of finance influence the cash flow. Operating activities are those that reflect the daily activities of the company. This chapter familiarises students with cash flow statements, beginning by listing out the components of cash flow statements along with their definitions. It also includes multiple exercises that help students try themselves and prepare cash flow statements or a set of financial scenarios.
