2 min read
Definition
A cash flow statement is one of the three main financial statements, showing how cash moved through a business over a period — split into operating, investing and financing activities. Unlike the profit and loss account, it counts only actual cash movements.
In plain terms
It reconciles the profit figure to the change in the bank balance, explaining why a profitable business might have less cash, or a loss-making one more. For directors it is the statement that reveals where the money actually went.
Why it matters
Reading it well shows whether profit is turning into cash and how the business is funding itself. See the cash flow statement explained.
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