From the course: A Guide to Understanding Financial Statements
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What is the statement of cash flows?
From the course: A Guide to Understanding Financial Statements
What is the statement of cash flows?
- [Instructor] And now we're ready to turn our attention to our third and final financial statement, the statement of cash flows. Like we spoke about earlier, the statement of cash flows allows you to understand all of the details behind how your most important asset is moving, your cash. This is an extra important financial statement because a company may be reporting very high losses or very low cash flows. Or perhaps it's the other way around, the company's actual profits are very low, but their cash flows are very high. This can be if a company, for example, is charging in advance before they actually carry out their product or service to their customers. The statement of cash flows is separated by these three sections, cash from operating activities, cash from investing activities, and cash from financing activities. We'll go over the details behind each of these sections shortly, but first, a few other notes on the statement of cash flows. The statement of cash flows can be…
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