General Studies and Accounting: Cash Flow Statement

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Cash Flow Statement:

Cash Flow Statement is called as 3^rd Financial Statement of a company.
It helps to identify both cash inflow and outflow of a company.

Objectives:
To provide information about the cash flows associated with Operating, Investing and Financing activities of the firm during the accounting period.
Significance:
It will be helpful for the stake holders of the company.
It helpful for dividend payable.
Interest Payment.
Debt repayment.
Payment to employees.
Payment to Suppliers.
Taxes etc.,

Meaning:
It is a statement of indicating sources of cash inflows and transactions of cash outflows of a firm during an accounting period.
Activities which generates cash inflows – sources of cash.
Activities which cause cash outflows – uses of cash.
Usefulness:
To find out cash generated out of normal business Operating activities/Operations of a company.
Find out the details about obtained cash out of financial activities.
Find out the cash spending on investment activities – purchase of assets etc.,
In what ways redemption of shares and debentures occurred.
Proportion of debt and equity for cash raised from outside.
Companies borrowing for the purpose of dividends.