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Explain the importance of each section of the cash flow statement: Cash from (used by) operations,...

Explain the importance of each section of the cash flow statement: Cash from (used by) operations, Cash from investing activities, and Cash from financing activities.

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Answer #1

The significance of different sections of cash flow statement is as follows :-

Cash flow from operating activities - this section includes the inflow and outflow of cash from all the daily business activities of a business like buying and selling inventory. This starts with net income and excludes non operating and non cash activities.

Cash flow from financing activities - these activities include all those activities affecting the capital structure of a business. This includes various activities like raising of additional capital ,buyback of shares , dividend policy etc

Cash flow from financing activities - this section includes the cash flow from all the long term capital expenditures. This includes buying and selling of property, plant , equipment etc

I hope i was successful in giving you all a general idea about all the three sections

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