{"id":10239,"date":"2023-03-21T19:06:47","date_gmt":"2023-03-21T13:36:47","guid":{"rendered":"https:\/\/www.tickertape.in\/glossary\/?p=10239"},"modified":"2023-03-21T19:06:49","modified_gmt":"2023-03-21T13:36:49","slug":"cash-flow-statement","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/","title":{"rendered":"<strong>Cash Flow Statement &#8211; Format, Importance, How To Interpret, And More With Examples<\/strong>"},"content":{"rendered":"\n<p>During the course of business, there are different sources from where cash flows into the business. Moreover, there are multiple cash outflows as well. A cash flow statement is prepared to account for this inflow and outflow of cash.&nbsp;<\/p>\n\n\n\n<p>Let\u2019s understand the cash flow statement meaning and more.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_22 counter-hierarchy counter-numeric\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">You will Learn About: <\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#What-is-a-cash-flow-statement\" title=\"What is a cash flow statement?\">What is a cash flow statement?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Return-on-equity-Highlights\" title=\"Return on equity: Highlights\">Return on equity: Highlights<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Sections-of-the-statement-of-cash-flows\" title=\"Sections of the statement of cash flows\">Sections of the statement of cash flows<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Format-of-a-cash-flow-statement\" title=\"Format of a cash flow statement\">Format of a cash flow statement<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Cash-flow-statement-example\" title=\"Cash flow statement example\">Cash flow statement example<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Interest-and-cash-flow\" title=\"Interest and cash flow\">Interest and cash flow<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Free-cash-flow\" title=\"Free cash flow\">Free cash flow<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#How-to-prepare-a-cash-flow-statement\" title=\"How to prepare a cash flow statement?\">How to prepare a cash flow statement?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#What-does-the-statement-of-cash-flow-tell\" title=\"What does the statement of cash flow tell?\">What does the statement of cash flow tell?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Importance-of-a-cash-flow-statement\" title=\"Importance of a cash flow statement\">Importance of a cash flow statement<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Why-is-the-cash-flow-statement-prepared\" title=\"Why is the cash flow statement prepared?\">Why is the cash flow statement prepared?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#How-to-interpret-a-cash-flow-statement\" title=\"How to interpret a cash flow statement?\">How to interpret a cash flow statement?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/glossary\/cash-flow-statement\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-a-cash-flow-statement\"><\/span><strong>What is a cash flow statement?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" src=\"https:\/\/i0.wp.com\/fourweekmba.com\/wp-content\/uploads\/2020\/07\/cash-flow-statement.png?resize=2048%2C1545&amp;ssl=1\" alt=\"\"\/><figcaption class=\"wp-element-caption\">Image source: <a href=\"https:\/\/fourweekmba.com\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">FourWeekMBA<\/a><\/figcaption><\/figure><\/div>\n\n\n<p>A business prepares three financial statements \u2013 Profit and Loss, Balance Sheet and Cash Flow Statement.<\/p>\n\n\n\n<p>A cash flow statement is a financial statement that accounts for the inflow and outflow of cash in the business during a financial year. The statement also depicts the sources of inflow as well as the expenses towards which the cash is being allocated.&nbsp;<\/p>\n\n\n\n<p>The cash flow statement measures how the business uses cash and its ability to generate liquid funds when needed. Read below to learn about the components of the cash flow statement.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-uagb-advanced-heading uagb-block-37fca231\"><h2 class=\"uagb-heading-text\"><span class=\"ez-toc-section\" id=\"Return-on-equity-Highlights\"><\/span>Return on equity: Highlights<span class=\"ez-toc-section-end\"><\/span><\/h2><\/div>\n\n\n\n<ul>\n<li>A cash flow statement is a statement showing cash outflows and inflows.<\/li>\n\n\n\n<li>The statement contains three different sections \u2013 operating, investing and financing activities.<\/li>\n\n\n\n<li>The statement is an important parameter for measuring business performance and is used by the management as well as by stakeholders.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Sections-of-the-statement-of-cash-flows\"><\/span><strong>Sections of the statement of cash flows<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"554\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-1024x554.jpeg\" alt=\"\" class=\"wp-image-10241\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-1024x554.jpeg 1024w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-300x162.jpeg 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-1536x832.jpeg 1536w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-1024x554@2x.jpeg 2048w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/Elements-of-cash-flow-statement-300x162@2x.jpeg 600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<p>A cash flow statement has different sections. These sections are as follows \u2013<\/p>\n\n\n\n<ul>\n<li><strong>Cash flow from operating activities<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Under this section, the cash flow generated from the everyday activities of the business is recorded. The operating activities are undertaken to generate revenue for the business. Common examples include payment of tax and interest, income received from selling goods or services, salaries and wages, rent, etc.<\/p>\n\n\n\n<ul>\n<li><strong>Cash flow from investing activities<\/strong><\/li>\n<\/ul>\n\n\n\n<p>If the company makes any investments and gets returns from them, it falls under this section. Investments include buying and selling of non-current assets, mergers, acquisitions, etc.<\/p>\n\n\n\n<ul>\n<li><strong>Cash flow from financing activities&nbsp;<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Cash flow resulting from borrowing and change in the <a href=\"https:\/\/www.tickertape.in\/glossary\/what-is-capital-definition-of-capital-types-and-its-importance\/\">capital<\/a> structure falls under this head. For instance, the cash raised from the issue of shares, borrowing or paying off loans, paying dividends, etc., are all recorded under this section.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Format-of-a-cash-flow-statement\"><\/span><strong>Format of a <\/strong><strong>cash flow statement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The cash flow statement format is simple, wherein the cash flows are recorded as per the three sections discussed above. There are three columns \u2013<\/p>\n\n\n\n<ul>\n<li>The sections and their respective cash flows are recorded in the first column.&nbsp;<\/li>\n\n\n\n<li>The second column helps add the cash flow from each section.<\/li>\n\n\n\n<li>The third column represents the section totals of all three sections and the final cash flow at the end.<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Cash-flow-statement-example\"><\/span><strong>Cash flow statement example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let\u2019s assume a business, M\/s XYZ, had the following cash flows during the year \u2013<\/p>\n\n\n\n<ul>\n<li>Rent paid for office premises \u2013 Rs. 40,000<\/li>\n\n\n\n<li>Revenue from sales \u2013 Rs. 5 lakh<\/li>\n\n\n\n<li>Wages paid \u2013 Rs. 2 lakh<\/li>\n\n\n\n<li>Interest paid \u2013 Rs. 10,000<\/li>\n\n\n\n<li>Purchase of equipment \u2013 Rs. 2 lakh<\/li>\n\n\n\n<li>Interest received on <a href=\"https:\/\/www.tickertape.in\/glossary\/investment-meaning-types-how-to-invest-and-savings-vs-investments\/\">investment<\/a> \u2013 Rs. 20,000<\/li>\n\n\n\n<li>Issuance of bonds \u2013 Rs. 4 lakh<\/li>\n\n\n\n<li>Paid to creditors \u2013 Rs. 1 lakh<\/li>\n<\/ul>\n\n\n\n<p>The cash flow statement of the business would be prepared in the following manner \u2013<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Particulars&nbsp;<\/td><td>Amount&nbsp;<\/td><td>Amount&nbsp;<\/td><\/tr><tr><td><strong>cash flow from operating activities<\/strong><br>Rent paid <br>Sales revenue<br>Interest paid<br><strong>Net cash flow from operating activities<\/strong><\/td><td><br>(Rs. 40,000)<br>Rs. 500,000<br>(Rs. 10,000)<\/td><td><br><br><br><br>Rs. 4,50,000<\/td><\/tr><tr><td><strong>cash flow from investing activities<\/strong><br>Equipment purchase<br>Interest on investment&nbsp;<br><strong>Net cash flow from investing activities<\/strong><\/td><td><br>(Rs. 200,000)<br>Rs. 20,000<\/td><td><br><br><br>(Rs. 1,80,000)<\/td><\/tr><tr><td><strong>cash flow from financing activities<\/strong><br>Issuance of bonds<br>Payment to creditors<br><strong>Net cash flow from financing activities&nbsp;<\/strong><\/td><td><br>Rs. 400,000<br>(Rs. 100,000)<\/td><td><br><br><br>Rs. 3,00,000<\/td><\/tr><tr><td><strong>Net cash flow during the year<\/strong><\/td><td><\/td><td>Rs. 5,70,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>This shows that the business has a cash balance of Rs. 5.7 lakhs at the end of the financial year<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Interest-and-cash-flow\"><\/span><strong>Interest and cash flow<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to Ind AS 7 \u2013 Statement of cash flows, any interest paid by a business would fall under the \u2018cash flow from financing activities\u2019 section. On the other hand, interest received would fall under the \u2018cash flow from investing activities\u2019.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Free-cash-flow\"><\/span><strong>Free cash flow<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Free cash flow is what is left with a company after deducting the operating and capital expenses. It depicts a company\u2019s ability to pay dividends to its shareholders.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How-to-prepare-a-cash-flow-statement\"><\/span><strong>How to prepare a cash flow statement?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"607\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-1024x607.jpeg\" alt=\"\" class=\"wp-image-10242\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-1024x607.jpeg 1024w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-300x178.jpeg 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-1536x911.jpeg 1536w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-1024x607@2x.jpeg 2048w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/cash-flow-method-300x178@2x.jpeg 600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<p>There are two ways to prepare a cash flow statement. These are explained below \u2013<\/p>\n\n\n\n<ul>\n<li><strong>Direct method<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The direct method adds up all the cash inflows and subtracts all the outflows. The remaining balance shows the net cash flow of the business.<\/p>\n\n\n\n<ul>\n<li><strong>Indirect method<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The indirect method uses the accrual basis for preparing the cash flow statement. Under this method, the inflows and outflows are recorded when the transaction is done, even if the actual cash is not transferred.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"What-does-the-statement-of-cash-flow-tell\"><\/span><strong>What does the statement of cash flow tell?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following can be interpreted from the cash flow statement \u2013<\/p>\n\n\n\n<ul>\n<li>The company\u2019s performance during the financial year<\/li>\n\n\n\n<li>The company\u2019s ability to pay its operating and investing expenses without depending on borrowing or raising fresh capital.<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Importance-of-a-cash-flow-statement\"><\/span><strong>Importance of a cash flow statement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are some points that establish the advantages of a cash flow statement \u2013<\/p>\n\n\n\n<ul>\n<li>The statement helps businesses take suitable short-term decisions to maintain their profitability and liquidity.<\/li>\n\n\n\n<li>The statement shows the primary expense and revenue areas. This information can be used by the management to increase the inflows and reduce the outflows.<\/li>\n\n\n\n<li>The cash flow statement serves as a yardstick to check areas of concern.<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Why-is-the-cash-flow-statement-prepared\"><\/span><strong>Why is the cash flow statement prepared<\/strong><strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The cash flow statement is one of the three primary financial statements of the company besides the profit and loss statement and the balance sheet.&nbsp;<\/p>\n\n\n\n<p>It gives useful information to the company and its management. Moreover, investors and stakeholders can also assess a company\u2019s performance and solvency through the statement.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How-to-interpret-a-cash-flow-statement\"><\/span><strong>How to interpret a cash flow statement?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"225\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-1024x225.jpeg\" alt=\"\" class=\"wp-image-10243\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-1024x225.jpeg 1024w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-300x66.jpeg 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-1536x337.jpeg 1536w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-1024x225@2x.jpeg 2048w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/negative-postive-cash-flow-300x66@2x.jpeg 600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<p>A cash flow statement can deliver two possible figures \u2013 positive or negative. Here\u2019s how to interpret them \u2013&nbsp;<\/p>\n\n\n\n<ul>\n<li><strong>Positive cash flow<\/strong><\/li>\n<\/ul>\n\n\n\n<p>A positive cash flow means that the company has a cash balance left in hand after paying off all its expenses. This is a good sign and shows that the company can meet its short-term needs.<\/p>\n\n\n\n<ul>\n<li><strong>Negative cash flow<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Negative cash flow is when the outflows are higher than the inflows. This shows that the business is incurring higher expenses without having the funds to pay for them. Consistent negative cash flows can be a red flag.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Cash flow statement is one of the three financial statements that companies are required to prepare. It records the total cash inflow and outflow. It measures the company&#8217;s liquidity and helps assess where the company funds are employed. Understand the uses of cash flow statement and how it is prepared to learn a company&#8217;s primary expenses and income sources. You can check the cash flow statement of any company using Tickertape\u2019s <a href=\"https:\/\/www.tickertape.in\/glossary\/stock\/\">Stock<\/a> Pages. Here is an example of the cash flow statement of <a href=\"https:\/\/www.tickertape.in\/stocks\/reliance-industries-RELI?utm_source=glossary&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Reliance Industries Ltd<\/a> &#8211;&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/DJQoUqBIspTL8unRSXWoz5c_68GE5SaYVsoeZURjracreURudxWCXkiOUav6xgSZRlsFXGepi11qQrKMvG1x3zH5FSlxrHMvlBcyeycjwBLgf-EP-5CHtwIlfI1rYrudNtmLQmVmcyyZ\" alt=\"\"\/><figcaption class=\"wp-element-caption\"><em>Cash flow statement of Reliance Industries Ltd<\/em><\/figcaption><\/figure><\/div>\n\n\n<p>To access the cash flow statement of any company, follow these steps:<\/p>\n\n\n\n<ul>\n<li>Go to <a href=\"https:\/\/www.tickertape.in\/?utm_source=glossary&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape<\/a><\/li>\n\n\n\n<li>Search for the stock\/company of your choice<\/li>\n\n\n\n<li>Click on \u2018Financials\u2019 and then click on \u2018Cash Flow\u2019<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-9dea4968 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-true uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-7c401074\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Are cash flow and profits the same?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">No, they are not. While cash flow shows the availability of liquid funds, profit shows earnings. A business might have a positive cash flow but can still be making make a loss. On the other hand, the business might make a profit but have a negative cash flow.<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-7fee84ba\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>How to check if the cash flow statement has been correctly prepared?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">If the opening balance of cash added to the total balance of the three sections of the cash flow statement match the closing cash flow, the statement is correctly prepared.<\/p><\/div>\n<\/div>\n\n\n\n<p>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The cash flow statement records the inflow and outflow of cash in the business and helps assess liquidity. Let\u2019s understand this statement in more detail.<\/p>\n","protected":false},"author":90,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":""},"categories":[1],"tags":[],"jetpack_featured_media_url":"","uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"authorship-box-avatar":false,"authorship-box-related":false,"post-thumbnail":false,"contentberg-main":false,"contentberg-main-full":false,"contentberg-slider-stylish":false,"contentberg-slider-carousel":false,"contentberg-slider-grid-b":false,"contentberg-slider-grid-b-sm":false,"contentberg-slider-bold-sm":false,"contentberg-grid":false,"contentberg-list":false,"contentberg-list-b":false,"contentberg-thumb":false,"contentberg-thumb-alt":false},"uagb_author_info":{"display_name":"Anjali Chourasiya","author_link":""},"uagb_comment_info":0,"uagb_excerpt":"The cash flow statement records the inflow and outflow of cash in the business and helps assess liquidity. Let\u2019s understand this statement in more detail.","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10239"}],"collection":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/users\/90"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/comments?post=10239"}],"version-history":[{"count":1,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10239\/revisions"}],"predecessor-version":[{"id":10245,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10239\/revisions\/10245"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/media?parent=10239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/categories?post=10239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/tags?post=10239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}